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Amid recession, Greece promises to meet savings targets

By Costas Kantouris
Associated Press / September 11, 2011

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THESSALONIKI, Greece - Greece will meet ambitious savings targets despite a deepening recession this year, the prime minister said yesterday, to secure the continued flow of international rescue loans that are protecting the debt-crippled country from a catastrophic bankruptcy.

As George Papandreou delivered his annual keynote speech on the economy in Greece’s second-largest city of Thessaloniki, police on the streets outside clashed with violent demonstrators as more than 25,000 people - from taxi-drivers to sports fans - joined a wave of anti-austerity protests.

Two people were arrested and nearly 100 people detained, police said, while at least two demonstrators were injured during the clashes in the northern port city.

“We will push through all the major changes our country has needed for years,’’ Papandreou said in a nationally televised address. “And we will take whatever other decisions are needed, we will do whatever is necessary to keep the country on its feet.’’

The government has promised to make up for weeks of inactivity by accelerating overdue reforms meant to cut excess from the bloated public sector. It even broke a major taboo by warning that thousands of civil servants - hired with guarantees of lifetime jobs - could be fired.

Papandreou said his main concern was to keep the country solvent.

“We don’t have the right to abandon this effort halfway through,’’ he said. “Because if it remains half-done, [our] sacrifices will have been in vain.’’

Papandreou’s Socialist government has imposed painful austerity measures over the past 20 months - cutting pensions and salaries while raising taxes and retirement ages - to secure vital international rescue loans worth $302.6 billion. But its efforts to economize while reviving a fast-contracting economy amid record unemployment have faltered, sparking new market distress.

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