Greece vows new cuts on eve of crunch eurozone talks

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Greece vows new cuts on eve of crunch eurozone talks

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Greece vows to devise new plan to reduce its deficit to avoid default.

12 September,2011 08:39 am

Debt-burdened Greece has pledged fresh action to trim its deficit as eurozone leaders geared up for crunch talks this week to save Athens from default and tame Europes runaway debt crisis.As European powerhouse Germany warned of the possibility of a worst-case scenario orderly default for Greece, Greek Finance Minister Evangelos Venizelos announced plans Sunday to slice an extra two billion euros off the deficit.The pledge to raise fresh funds, through a real estate tax and a month-long salary cut for elected officials, follows growing concern Greece could fail to meet terms set under a 2010 international bailout by the International Monetary Fund and 17-nation eurozone.In Brussels, the move by Athens caused immediate relief after a summer of market havoc and a bleak week of pessimistic pronouncements evoking the implosion of the eurozone.EU economy commissioner Olli Rehn hailed the Greek decisions and said IMF, European Union and European Central Bank experts would head to Athens in the coming days to look at a new eight-billion-euro tranche of Greeces 2010 rescue package.The troika of lenders left Greece in displeasure earlier this month due to slippage on targets for debt and deficit reduction set under the 110-billion-euro rescue.Next Friday and Saturday will see the first post-summer talks, in Poland, of finance ministers from the increasingly divided nations sharing the euro.Split over how to address a crisis exacerbated by global economic gloom, the ministers are to discuss obstacles holding up a second 160-billion-euro ($220 billion) bailout for Greece, agreed in principle at a July 21 summit.But barely seven weeks on, pressure on the single currency has hit historic highs amid rising fears a divided Europe could fail to stem debt contagion.Top economists such as Nouriel Roubini and even Germanys former chancellor Gerhard Schroeder have warned only full political union, something approaching a United States of Europe, can keep the euro on its feet.This weekend, German Chancellor Angela Merkel called on her compatriots to be patient with Greece in its struggle to whittle down a 350-billion-euro debt mountain.In another blow to the eurozones struggle to speak with a single voice on the crisis, ECB chief economist Juergen Stark abruptly quit Friday, sending the euro and stocks tumbling.The programme had been on hold until last month, when investors fled Italian and Spanish bonds, threatening to force a bailout of the eurozones third- and fourth-largest economies.The ECB has since bought more than 50 billion euros in eurozone debt, leading to growing calls for governments to issue jointly backed eurobonds in future -- a demand roundly rejected by the currency areas main paymaster, Germany.