NEW YORK (CNNMoney.com) -- Facing firm demands from the European Union and financial markets to cut its deficit, Greece announced cost-cutting measures Wednesday that will save the debt-challenged country €4.8 billion, $6.53 billion, this year.
The Greek government plans to cut civil service workers' entitlements by 12%. This includes a 30% decrease in holiday bonus payments, according to The Wall Street Journal's online edition. Officials also said civil service pensions will be frozen for the year.
To increase revenue, the Greek government said it will raise the value-added tax to 21% from 19% on items including clothing and footwear. Sales tax on food and medicine will rise to 10% from 9% and the tax rate on printed products will increase to 5% from 4.5%.
The country will boost the tax on alcohol by 20% and raise the tax on tobacco to 65% from 63%. Taxes on gasoline prices will be hiked by €0.08 per liter.
Officials expect the measures will reduce Greece's budget deficit to 8.7% of the country's gross domestic product this year from a level of 12.7% last year, according to the report. The European Union had given Greece until March 16 to show it is making progress in cutting its deficit from more than four times the allowed level.
Umbrella union for civil servants ADEDY is already speaking out against the measures and has called for a 24-hour general strike on March 16, said the Journal.
In a speech to parliament Tuesday, Greek prime minister George Papandreou said the country risks bankruptcy if it neglects to find lenders to cover its €300 billion, $409 billion, in debt, the Journal said.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.92%||3.97%|
|15 yr fixed||3.00%||3.08%|
|30 yr refi||3.99%||4.02%|
|15 yr refi||3.10%||3.16%|
Today's featured rates:
Berkshire Hathaway CEO Warren Buffett released his 50th annual letter to shareholders. The Oracle of Omaha thinks the next 50 years will be great and knows who will replace him. More
Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More
These people say they've already finished watching all 13 episodes of the new season of 'House of Cards.' More
A social media frenzy about the color of a dress is bringing fame and fortune for one small British fashion company. More