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Greece Announces Sweeping Austerity Package

Greek Prime Minister George Papandreou
The Greek government has announced that it will freeze pensions, slash civil service bonuses, and increase sales tax on fuel, tobacco, and alcohol in a new 4.8 billion euro ($6.5 billion) austerity package.

Greece has a 12.7 percent budget deficit -- more than four times the limit under eurozone rules -- and a debt of 300 billion euros (nearly $420 billion).

Greek Prime Minister George Papandreou made the announcement after a meeting with Greek President Karolos Papoulias.

"I informed the president of the difficult decisions that we took, decisions that were not made by choice but were necessary to take, necessary for the survival of the country and the economy, so the country can escape from the speculators, the turmoil and the mistruths, so we can breathe and wage this battle that I and the government are waging along with the Greek people for a more just society, for the big changes that will bring development, jobs, and prospects for the country," Papandreou said.

Papandreou also said Greece is "awaiting European solidarity" to help it deal with its financial crisis.

European Commission President Jose Manuel Barroso welcomed the decision, but warned that the "full and timely implementation" of the announced fiscal measures, along with structural reforms, was "paramount" for the success of the plan.

compiled from agency reports