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Greece's Massive Debt Spurs Currency Concerns


And we turn to Europe now, where the European Union is endorsing a Greek plan to cut the country's massive budget deficit, and there's already a backlash against the plan in Greece. The plan calls for pay cuts and tax hikes.

Teri Schultz has this report.

Prime Minister GEORGE PAPANDREOU: (Foreign language spoken)

TERI SCHULTZ: In a televised evening address, Prime Minister George Papandreou sought to rally Greeks behind his austerity plan, telling them every citizen should be prepared to fight to protect the economy. His announcement, that gas prices will rise, government salaries will be frozen, and the retirement age will go up, has indeed inspired them to fight against the plan. Public sector workers immediately called for strikes. But with a deficit more than four times the EU's legal limit and debt of more than $300 billion, Papandreou felt he had little choice.

The European Union has ruled out a bailout from Brussels despite enormous concern about the negative impact of the crisis on the euro, the common currency in 16 of the 27 member states. EU's spokeswoman Amelia Torres calls the plan risky but achievable.

Ms. AMELIA TORRES (EU Spokesperson): We are creating a process of monitoring the implementation of the program that includes the need to adopt additional measures in case some of those risks will materialize.

SCHULTZ: But Jean Pisani-Ferry, director of the Bruegel economic think tank, says Papandreou does have an alternative and should call in the International Monetary Fund - the IMF - to help stabilize the country. Pisani-Ferry says Brussels doesnt want to involve outside players.

Mr. JEAN PISANI-FERRY (Think Tank Director): It would be admitting that there is something not functional within the EU area.

SCHULTZ: The IMF says it nonetheless will be on standby in case Greece should need its help.

For NPR News, I'm Teri Schultz, in Brussels. Transcript provided by NPR, Copyright NPR.

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