Prime Minister George Papandreou told his Cabinet members on Thursday that the government aims to reduce its deficit by 6 percentage points of the GDP in 2010, corresponding to 14 billion euros, while he underlined that the recent definitive assessment of the 2009 deficits “has changed the starting point ... in 2009 the deficit was 36.2 billion euros and not 32 billion as we thought. Therefore, the deficit was 15.4 pct of the GDP and not 13.6 pct.”

“The initial targets of our programme will be maintained in the 2011 state budget as we have pledged. Namely, to reduce the deficit to 17 billion euros by the end of 2011,” he said, adding that “essentially, the targets originally set have been met even though the starting points were changed.”

“The difficult struggle we have launched has proved to be much harder than anticipated,” he said, stressing that “efforts this year should be more intense than predicted,” considering that the “deficit for 2010 is reduced by 14 billion euros to 22 billions and not to 18 billions as planned.”

Papandreou stated that the government has pledged that the civil servants will see no more cuts in their salaries or pensions, while there will be no additional tax increases, adding that “an effort will be made for a milder adjustment because the market is faced with huge problems.”

He underlined that structural problems will be targeted to allow for spending cuts in public administration while, as regards the loss-making public utility companies, he said that “many of them do not even offer the right services”. He also referred to the great potential for spending cuts in the sector of health.

Having as a goal to offer better services to the people, the premier called on his ministers to table proposals for the abolition, incorporation and merger of agencies, underlining that “the civil servants should be allies in this effort”. He also added that the implementation of e-governance in all sectors is imperative.

As regards developments in Europe, Papandreou stated that “even before the crisis, our position was in favour of serious EU economic governance and a permanent European mechanism.” On the private sector’s participation in the mechanism, he backed the imposition of stock market transactions tax (of roughly 0.05 pct) estimated to yield roughly 200 billion euros annually in Europe.

Referring to the recent local government elections, the prime minister stated that “the people with their vote have turned their backs to destabilisation.”