Greece and Its Lenders Agree on Austerity Plan

Posted By on June 24, 2011

ATHENS — Greece and its foreign lenders reached an agreement on Thursday on a five-year austerity plan that Prime Minister George Papandreou must now push through Parliament in order for Greece to stave off default.

Last week, the European Union, European Central Bank and International Monetary Fund, known as the troika, unexpectedly withheld the next installment of $17 billion in emergency aid to Greece over concerns that its blistering program of austerity measures might be falling short of its goals.

That set off a week of market turmoil and political uncertainty in Greece that was calmed on Tuesday after Mr. Papandreou obtained a parliamentary vote of confidence on a new cabinet. Markets recovered from an early swoon on Thursday after reports that Greece and the troika had reached a deal, which includes an additional $5.4 billion in tax increases and spending cuts.

In a news conference in Athens, the new finance minister, Evangelos Venizelos, said that some of the new revenue would come from changes in income tax rules, a $430 annual charge to the thousands of self-employed Greek workers and an increase in the tax on heating oil. […read more]