Final details of the measures, which were intended to slash the budget deficit by 10-11 percentage points of gross domestic product over the next three years, were still being worked out.
Negotiations with officials from the IMF, the European Commission and the European Central Bank are due to be completed at the weekend and the measures will be presented for approval by the Greek parliament next week.
The package also includes an increase in value-added tax, the second this year.
Greek two-year bond yields, which have an inverse relationship with prices, fell more than 3 percentage points to 12.74 per cent, while the stock market rose 7.14 per cent as confidence grew after it was reported on Wednesday that the EU and IMF were preparing a €120bn loan to bail out Athens.
Greece faces exceptionally strict monitoring by the EU and IMF because of its poor record of implementing previous economic reform programmes:
-Three-year reform programme
-Two to three percentage points increase in value-added tax
-Three-year public sector pay freeze; recruitment frozen
-Abolition of ‘13th and 14th monthly salary’ for public sector workers; 5 per cent cut in allowances
-No renewals for short-term public sector contracts
-Closure of more than 800 out-dated state entities
-Opening up of more than 60 ‘closed-shop’ professions
-Overhaul of pension system: raising average retirement age to 67 for men and women; cutting state corporation pensions.
-Privatisation: sales of state corporations; flotations on Athens stock exchange; sales and leasing of state-owned properties
George Papandreou, prime minister, was last week forced to activate the EU-IMF rescue package after three previous rounds of austerity measures failed to convince financial markets that Greece could bring its public finances under control.
On top of the wage freeze, public sector workers will lose their “13th and 14th month” salaries, paid at Christmas and Easter, and see further cuts in allowances.
Greece’s swollen public sector, which employs about 13 per cent of the workforce, will be gradually reduced through a recruitment freeze, the abolition of short-term contracts and closures of hundreds of outdated state entities.
