Factbox: Details of Greek austerity deal with EU/IMF

(BestGrowthStock) – Greece announced new austerity measures on Sunday paving the way for a multi-billion euro bailout from the European Union and International Monetary Fund.

Under pressure from financial markets, cash-strapped Greece has announced four austerity packages over the past five months, but failed to reassure markets, partly because the government never spelled out specific budget cuts for 2011 and 2012.

Under the new plan, Greece will narrow its budget shortfall from 13.6 percent of gross domestic product last year to 8.1 percent this year, 7.6 percent in 2011 and 2.6 percent in 2014.

Public debt is seen peaking at 149 percent of GDP in 2013 and then falling to 144 percent of GDP in 2014. Below is an table of new government forecasts and an outline of the main measures announced on Sunday:

PUBLIC SECTOR SPENDING CUTS

– Public sector pay freeze extended until 2014.

– Christmas, Easter and summer holiday bonuses in the public sector, also known as 13th and 14th salaries, are abolished for those earning above 3,000 euros a month and will be capped at 1,000 euros for those earning less. These bonus salaries had already been cut by 30 percent under a previous set of austerity measures announced in March.

– Public sector allowances to be cut by an additional 8 percent. These allowances, which account for a significant part of civil servants’ overall income, were already cut by 12 percent under the latest round of austerity measures announced in March.

ADDITIONAL TAX MEASURES

– The main VAT rate is increased by 2 percentage points to 23 percent. It had already been raised to 21 percent from 19 percent in March.

– Excise taxes on fuel, cigarettes and alcohol are increased by a further 10 percent.

– The government expects to generate additional revenues through another one-off tax on highly profitable companies, as well as new gambling and gaming licenses, more property taxes and green taxes.

PRIVATE SECTOR

– The government said it will revise laws which currently bar companies from firing more than 2 percent of their total work force each month. Other changes will be made regarding severance payments. A new minimum wage will be introduced, applying to the young and the long-term unemployed.

STRUCTURAL REFORMS

– Liberalization in the energy, transport markets and opening up of closed professions.

PENSIONS

– The retirement age, currently 65 years for men and 60 years for women, will be linked to average life expectancy.

– Minimum contribution period to qualify for full pension will be gradually increased to 40 years from 37 years by 2015.

– Early retirement will be curtailed, with a view to banning any retirement below 60.

– Pensions will be cut, to reflect a pensioner’s average pay over the entire working life rather than his or her final salary level.

BANKS

The Greek government is extending a bank assistance package to provide 17 billion euros in liquidity to the sector and will also set up, in consultation with the IMF, European Commission and ECB, an independent Financial Stability Fund to provide equity support to banks as needed.

Investment Research

(Reporting by Harry Papachristou; Editing by Noah Barkin/David Stamp)

Factbox: Details of Greek austerity deal with EU/IMF