Papandreou told a meeting with top aides Saturday that finance officials will cut excess spending.
Greece, the recipient of 110 billion euros ($151 billion) in aid from the European Union and the International Monetary Fund has committed to a stringent schedule of deficit reduction but revenues have fallen short of target amid a deepening recession.
Greek Finance Minister George Papaconstantinou said Friday any new austerity measures in the country would come from spending cuts and not new taxes.
“If a further adjustment is needed, it will be made in state spending cuts, where there really is waste that can be reduced,” Papaconstantinou told the private Mega channel. Greece has already slashed its runaway deficit by over 14 billion euros ($19 billion) this year under a draconian program of tax hikes and pay cuts mandated by the European Union and the International Monetary Fund in return for a massive loan that saved the country from looming bankruptcy. But a revised calculation of the Greek state deficit by EU data agency Eurostat that will now include the bulging losses of public companies is expected to still leave the government short of its targets.
The revised deficit figures are expected to be released on Monday as a mission from the EU, the European Central Bank and the IMF arrives in Athens for a scheduled audit of Greek finances.
The new deficit figures are expected to show an upward revision for 2009 to more than 15.0 percent of GDP from 13.6 percent.
The EU-IMF inspection will determine if Greece will be given a third installment, worth nine billion euros ($12 billion), from the 110-billion-euro loan package.
Papandreou, who faces a local election test on Sunday, conceded Thursday that the public deficit will exceed the target. “The figure for 2009 will be substantially higher,” Papandreou told reporters.
The finance minister said on Friday that the cuts would likely be made in public companies where state inspectors have lately found exorbitant salaries and overstaffing. “We have spoken of the need to limit the deficits of public companies,” Papaconstantinou said. “At the end of a restructuring process, obviously public companies will have fewer staff than today. This can be done with transfers to other state services, retirement, or through the non-renewal of contracts that expire. “It does not mean mass layoffs of contract workers,” he said.
Papaconstantinou added that the government hoped to persuade its three creditors — known as the troika in Greece — that no new sacrifices would be necessary. He added that the three-year loan agreement, or memorandum, “is a living text that changes in time.”
The austerity measures adopted so far have already plunged the Greek economy into a growing recession. Earlier on Friday, official data showed the economy shrank by 4.5 percent in the last 12 months. Gross domestic product contracted by 1.1 percent in the third quarter from output in the second quarter, data from the Greek statistics agency said.
