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Greeks await fresh economic pain Greeks await fresh economic pain
(10 minutes later)
Government ministers in Greece are due to meet to agree a third round of tax rises and spending cuts intended to ease the country's financial crisis.Government ministers in Greece are due to meet to agree a third round of tax rises and spending cuts intended to ease the country's financial crisis.
A rise in sales tax and petrol and diesel tariffs is expected, and possibly a move to cut the generous holiday bonus paid to civil servants.A rise in sales tax and petrol and diesel tariffs is expected, and possibly a move to cut the generous holiday bonus paid to civil servants.
PM George Papandreou has likened the budget crisis to a "wartime situation".PM George Papandreou has likened the budget crisis to a "wartime situation".
The EU has called for further austerity measures amid fears that Greece's problems could undermine the eurozone.The EU has called for further austerity measures amid fears that Greece's problems could undermine the eurozone.
There have already been strikes by trades unions in protest against the Athens government's cost-cutting plans.There have already been strikes by trades unions in protest against the Athens government's cost-cutting plans.
The socialist government has pledged to reduce Greece's budget deficit from 12.7% - more than four times the limit under eurozone rules - to 8.7% during 2010.The socialist government has pledged to reduce Greece's budget deficit from 12.7% - more than four times the limit under eurozone rules - to 8.7% during 2010.
It also also seeking to reduce its 300bn euros ($419bn; £259bn) debt.It also also seeking to reduce its 300bn euros ($419bn; £259bn) debt.
'Nightmare of bankruptcy''Nightmare of bankruptcy'
"We find ourselves in a wartime situation, faced with the negative scenarios affecting our country," Mr Papandreou told the parliamentary group of his Socialist Party (Pasok) ahead of the cabinet meeting."We find ourselves in a wartime situation, faced with the negative scenarios affecting our country," Mr Papandreou told the parliamentary group of his Socialist Party (Pasok) ahead of the cabinet meeting.
He said that Greece had to avoid "a nightmare of bankruptcy" in which the state would not be able to pay salaries or pensions.He said that Greece had to avoid "a nightmare of bankruptcy" in which the state would not be able to pay salaries or pensions.
Mr Papandreou has used some dramatic phrases to describe Greece's fiscal problems over the past few months, but this was his most alarmist to date, the BBC's Malcolm Brabant in Athens says.Mr Papandreou has used some dramatic phrases to describe Greece's fiscal problems over the past few months, but this was his most alarmist to date, the BBC's Malcolm Brabant in Athens says.
It is believed that sales tax will rise by two percentage points, that petrol and diesel tariffs will be increased for the second time in a month, and that luxury goods will be subject to a special duty.It is believed that sales tax will rise by two percentage points, that petrol and diesel tariffs will be increased for the second time in a month, and that luxury goods will be subject to a special duty.
What's uncertain is whether the government will do the European Commisson's bidding and scrap the annual holiday bonus paid to civil servants, our correspondent says.What's uncertain is whether the government will do the European Commisson's bidding and scrap the annual holiday bonus paid to civil servants, our correspondent says.
Economy Minister Louka Katseli has warned that the measures have to be socially just.Economy Minister Louka Katseli has warned that the measures have to be socially just.
Trades unions have warned that removing the bonus would be a "declaration of war".Trades unions have warned that removing the bonus would be a "declaration of war".
Businesses in Greece are likely to react badly to further tax increases, as they see them as being counter-productive, discouraging consumer spending and contributing to a further downward spiral, our correspondent adds.Businesses in Greece are likely to react badly to further tax increases, as they see them as being counter-productive, discouraging consumer spending and contributing to a further downward spiral, our correspondent adds.