Greece on Sunday slapped a new tax on real estate to plug a 2011 budget hole, please international lenders and secure a key new loan tranche as concerns mounted in Europe over its euro zone membership.
The European Commission welcomed the measure, just days before EU and IMF inspectors arrive in Athens to hear how the government plans to overcome delays and missed fiscal targets before approving an 8-billion-euro tranche from its 110-billion-euro bailout, key to Greece's survival.
Finance Minister Evangelos Venizelos said the cabinet agreed the measure to raise about 2 billion euros missing from the government's coffers and to meet the 2011 budget deficit target, estimated at around 8.1 percent of GDP.
"It's the only measure that can be applied immediately and produce results quickly because it does not depend on the tax-collecting mechanism," he told reporters, adding the levy would be collected through electricity bills.
The EU's Economic and Monetary Affairs Commissioner, Olli Rehn, said the levy would go far in meeting fiscal targets. Rehn said he expected the inspectors to complete their mission by the end of September.
"I welcome the expressed commitment by the Greek government to fully meet the agreed fiscal targets this year and next, and to take the necessary consolidation measures," Rehn said in a statement. "Greece needs to meet the agreed fiscal targets."
Responding to renewed talk in European capitals that Greece's will to comply with the bailout plan and stay in the euro bloc may be wavering, Prime Minister George Papandreou said his debt-ridden country was in the middle of a battle he was determined to win and ruled out snap elections.
"This is not the time for elections. This is the time for battle," he told a news conference after chairing the informal cabinet meeting in Thessaloniki. "This situation is similar to being in a war and asking the Greek people for money to buy weapons."
Papandreou admitted state mechanisms and entrenched unionist and other interests were hindering reforms but said the measures already announced would be enough for 2011 and 2012.
The government has already announced a "labour reserve" in the public sector, a way to eventually lay off civil servants who now have secured jobs for life.
Papandreou ruled out massive state firings, saying the civil service had already shrunk by about 100,000 people in the two years his socialist government has been in power.
Police fired tear gas to disperse violent anti-government demonstrators in the northern city of Thessaloniki on Saturday but the protest was smaller than many of those that often crippled Athens over the winter. Over 100 people were detained, police said.
The government's popularity has dwindled amid rising public discontent over continued austerity and the conservative New Democracy opposition now leads in opinion polls.
