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• Government announces new austerity measures in an effort to bring adjustment programme back on track, secure continuous access to official funding
• The measures aim to bridge identified budget gaps in 2011-2012 and rebalance the overall thrust of the medium-term fiscal plan towards expenditure-side adjustment• The latter is likely to improve budget execution as revenue performance is presently constrained by a deeper than expected recession and lingering dis-functionalities in the tax collection mechanism • In our view, the new austerity package significantly increases the chances for a successful completion of the 5th EC/IMF/ECB programme review (our baseline scenario)
• Looking further ahead, a rigorous implementation of the adjustment programme will be critical for securing the uninterrupted flow of official funding and, more imminently, the ratification of the July 21 EU Council announcements by national EU parliaments