Greece needs austerity measures to survive–PM

* “Survival of nation is red line,” Papandreou says

* Civil servants to state 4-hour work stoppage Tuesday

* Retail sales up in Feb but economists see sharp drop

By Renee Maltezou and Ingrid Melander

ATHENS, April 30 (BestGrowthStock) – Greece needs austerity measures
to survive, Prime Minister George Papandreou said on Friday,
rejecting calls from unions and opposition parties to resist
EU/IMF demands to raise taxes and cut public sector wages.

The debt-choked country is discussing with EU and IMF
officials 24 billion euros ($32 billion) worth of
deficit-cutting measures to clinch a three-year,
multi-billion-euro aid deal and avoid default. [nLDE63T0IC

“Today the top priority is the survival of the nation. This
is the red line,” Papandreou told parliament, after calls from
opposition parties not to make the harsh cuts.

“The economic measures we must take … are necessary for
our country’s protection, for our future, for us to be able to
stand on our feet.”

Union officials said Greece was asked to slash its deficit
by 10 percent of GDP in 2010-2011 by raising VAT tax, scrapping
public sector bonuses amounting to two extra months pay, and
freezing civil servants’ wages in exchange of getting the aid.

“High interest rates … have made it impossible to borrow
on international markets,” Deputy Finance Minister Philippos
Sachinidis told parliament, adding the aid package would offer
Greece up to 120 billion euros ($159.8 billion) for a 3-year
period at reasonable interest rates.


The Socialist government, elected in October on a promise to
tax the rich and help the poor, has already announced three sets
of austerity measures since revealing last year that the budget
deficit had shot up to more than twice previous forecasts.
The public sector union ADEDY, which represents half a
million workers, called on Friday for a four-hour work stoppage
on Tuesday to protest against the belt-tightening, on top of a
24-hour nationwide strike already decided for Wednesday.

“We want to help the country exit the crisis, but if the
government continues with these policies that hurt workers only,
we have no other choice but to oppose them with all our might,”
ADEDY’s general secretary Ilias Iliopoulos told Reuters.

Economists warn that the austerity measures risk further
worsening recession this year, with forecasts exceeding last
year’s 2.0 percent GDP decline.

Greece’s retail sales by volume rose 1.7 percent
year-on-year in February after a 5.8 percent increase in
January, data by the country’s statistics service showed Friday,
but economists predict a sharp drop.
“Consumer spending is expected to fall sharply in the coming
months as sentiment is revisiting historic lows because of the
high uncertainty over the short-term outlook of the economy,”
said Nikos Magginas at National Bank of Greece.

Opinion polls show a majority of Greeks oppose resorting to
the IMF and disagree with the sacrifices.

“I don’t think these measures will get us out of the crisis.
There is no salvation for Greece,” said Vassilis Fragiskakis,
32, a glass factory owner.

Fragiskakis’ factory, which employees 35 people, has seen
business go down in the last two months.

“The situation is very difficult. The reason we haven’t
fired anyone is that we see these people as our family, but in
the last two months we can barely make enough to pay their
salaries,” he said. “It’s tragic.”

Investment Analysis
(Additional reporting by Angeliki Koutantou, Harry
Papachristou, Dina Kyriakidou, George Georgiopoulos and Tatiana
Fragou; Writing by Ingrid Melander; Editing by Mark Heinrich)

Greece needs austerity measures to survive–PM