UPDATE 1-Greek deal sees 30 bln euros in new deficit cuts

* Finmin sees deficit falling below 3 pct/GDP in 2014

* VAT hike, 10 pct rise in fuel/alcohol/tobacco tax planned

* Finmin says choice between “collapse or salvation”

(Adds details, quotes)

ATHENS, May 2 (BestGrowthStock) – Greece has agreed a package of
austerity measures under which it aims to cut its budget deficit
by 30 billion euros over three years on top of measures already
agreed, Finance Minister George Papaconstantinou said on Sunday.

Under the deal with the European Union and International
Monetary Fund (IMF), Greece plans to cut the deficit to 8.1
percent of gross domestic product (GDP) in 2010, 7.6 percent in
2011 and 6.5 percent in 2012.

The deficit would not fall below the EU’s 3 percent of GDP
limit until 2014. Debt was expected to rise to nearly 150
percent in 2013, before falling from 2014.

“We are all being called to make a choice,” Papaconstantinou
told a news conference in Athens.

“The choice is between collapse or salvation. The choice is
between fleshing out a very ambitious and difficult 3-year
programme of fiscal consolidation, a programme of structural
reforms … or the country reaching an absolute dead-end.”

He said the measures included a rise in value-added tax
(VAT) to 23 percent from 21 percent, a 10 percent hike in fuel,
alcohol and tobacco taxes and a further reduction in public
sector salaries and pensions.

Greece would be shielded from exposure to debt markets for
three years under the plan, he added.

The Greek government is now forecasting GDP to contract by
4.0 percent in 2010 and 2.6 percent in 2011, before returning to
growth of 1.1 percent in 2012.

Money

UPDATE 1-Greek deal sees 30 bln euros in new deficit cuts