Prime Minister George Papandreou said yesterday that Greece has agreed the terms of a financial rescue deal with the European Union and IMF.
This will involve ‘great sacrifices’ by the working class and small farmers so that the bourgeoise can avoid national bankruptcy.
The announcement came a day after police again clashed with demonstrators in Athens protesting against the ‘socialist’ government’s savage cuts.
The rescue package is expected to amount to as much as 120bn euros (£100bn; $160bn) over three years.
In return, the Greek government is to impose a new round of sweeping ‘efficiencies’, including further tax rises, deeper cuts in pensions and bigger public service pay cuts.
Papandreou told a televised cabinet meeting that both active and retired public sector workers would bear the brunt of the new wave of budget cuts.
He said: ‘With our decision today our citizens will have to make great sacrifices.’
He added that while public anger was ‘evident, our national red line is to avoid bankruptcy’.
Papandreou warned: ‘Today the problem has taken on huge dimensions, today the fire risk extends not only to Greece but to the eurozone and beyond.
‘The cost of extinguishing it is very high, and it’s very high for Greek citizens.’
The austerity cuts aim to achieve fresh budget cuts of 30bn euros over three years – with the goal of cutting Greece’s public deficit to less than 3% of GDP by 2014. It currently stands at 13.6%.
Finance Minister George Papaconstantinou said Greece had been called on to make a ‘basic choice between collapse or salvation’.
He said the measures were the ‘only road to save the country’, which was threatened with default on debts totalling nearly 300 billion euros.
New emergency legislation authorising the cuts and tax rises is now being drafted and is due to be put before parliament for approval by the end of the week.
European Commission President Jose Manuel Barroso said Greece had committed to ‘a difficult but necessary reform process’.