Call it a big, fat Greek mess.
In a sign that Greece will likely have to endure more pain before it can stage a recovery, European Union officials yesterday scoffed at the country’s cost-cutting plans, saying the debt-laden nation must step up its efforts to slash spending if it wants to get out from under its mountain of debt.
Greek government officials had pledged to reduce the deficit to 8.7 percent of the country’s gross domestic product, from its current level of 12.7 percent, by hiking the country’s fuel tax, imposing a salary freeze on government workers, trimming benefits to civil servants and ending tax breaks for some workers, including those employed by the government.
But the EU said those moves weren’t enough and that Greece must make deeper cuts — to the tune of $5.4 billion — to help its case for aid from the rest of Europe.
According to The Wall Street Journal, EU officials want bigger cuts in benefits for civil servants and may push for the country to impose a luxury tax on high-priced items like cars and boats.
Such moves aren’t likely to go over well with Greek citizens, who have taken to the streets in the past week in protest of cuts already made by the government.
Greece is under extreme pressure to fix its finances as the nation is buckling under the weight of its debt load, which is four times greater than EU rules allow. Financing schemes used over the past decade have come under scrutiny, as it appears Greece was able to take on more debt without ever revealing the full details of how overextended the country was.
Meanwhile, Europe is flinching at the idea of bailing out the Mediterranean country, worried that a rescue could lead to higher taxes for the 16 countries that make up the euro zone. But letting the country fend for itself has already led to other worrisome results, including a rapidly declining euro.