Greece: More cuts are needed

May 1, 2010 at 12:00a.m.

Associated Press

ATHENS, Greece

Facing a dire choice of additional pain or bankruptcy, Greece on Friday heralded drastic new cuts and tax increases to win rescue loans from its European partners and the International Monetary Fund — and avoid a disastrous default on government debt.

Prime Minister George Papandreou said cuts are inevitable if the country is to keep afloat.

Greece, the EU and the IMF are expected to complete talks this weekend over what extra steps Athens must take as a condition of the rescue, which would provide $60 billion in loans this year and up to a reported $160 billion over three years.

Papandreou is widely expected to detail the cuts Sunday, the day after a mass protest rally planned by the country’s biggest labor unions to mark May Day. Officials briefed on the negotiations say the measures will include a further slash in civil- service pay, as well as state and private sector pensions, and a new hike in indirect taxes, including a 2-percentage-point increase in sales tax.

“It is a patriotic duty to undertake this, with whatever political cost, which is tiny faced with the national cost of inaction ... and indecision,” Papandreou said.