Greece adds new austerity measures to secure €8-bn IMF installment

Greece adopted yet more austerity measures yesterday as it  sought a bailout installment crucial to avoid running out of money next month, in the backdrop of the  IMF warning  that Europe's sovereign debt crisis risked punching a giant hole in banks' capital. (See: Debt crisis has upped European banks' risks by €300 billion: IMF)

The Greek cabinet agreed to cut high pensions by 20 per cent, put 30,000 civil servants in a "labor reserve" on a road to redundancy, lower the income taxation threshold and extend a real estate tax, according to government spokesman Ilias Mossialos.

Mossialos said the measures taken today would allow Greece to comply with the bailout plan through 2014.

The new package has been designed to ensure Greece received an €8-billion rescue loan vital to pay state salaries and bills in October.

Senior EU and IMF officials are due to arrive in Athens early next week to review progress, Mossialos said.

Greece is one of the frontline states including Ireland and Portugal gripped by the euro zone debt crisis. The crisis now threatens to spill over into Italy, Spain and some of Europe's biggest banks, risking plunging the west back into recession.