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Greek Cabinet OKs new austerity measures

ATHENS, Greece, June 9 (UPI) -- Greece's Cabinet sent new austerity measures and a $73 billion privatization plan to Parliament Thursday as Greece's gross domestic product tumbled 5.5 percent.

The measures -- proposed as protests raged in the streets of Athens and a $17 billion rescue-loan payment loomed due next month -- include fresh spending cuts and new taxes to bring the country's budget deficit to less than 1 percent of gross domestic product by 2015, down from 10.5 percent last year, Cabinet officials said.

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They didn't immediately offer further details, but the Cabinet considered several highly unpopular measures, such as new taxes on the poor, an extraordinary 3 percent levy on all Greek wage earners, new property taxes and cuts in retirement bonuses, The Wall Street Journal reported.

Prime Minister George Papandreou was quoted by the Athens News Agency-Macedonian Press Agency as saying he hoped the Cabinet measures would pass the 300-member unicameral Parliament by "the widest possible majority."

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The report of the 5.5 percent first-quarter GDP drop was accompanied by a separate government report pointing to an 11 percent decline in Greek industrial output in April from a year earlier after an 8 percent drop in March.

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Unemployment among people age 15 to 24 stood at 42.5 percent, up from 29.8 percent a year earlier.

New strikes hit Greece Thursday as hopes for growth in its troubled economy were further diminished by increasing pressure from creditors, German international broadcaster Deutsche Welle reported.

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The European Union, European Central Bank and International Monetary Fund -- the "troika" of lenders that bailed out Greece last year with a $160 billion loan -- said in a report Greece's recession would likely be deeper and longer than projected.

It added that as a result, Greece would likely remain locked out of financial markets through next year because it would not yet have the markets' confidence, the Journal said.

Meanwhile, Turkish President Abdullah Gul told a group of Istanbul minibus drivers during an impromptu conversation Greece could soon go bankrupt.

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"Greece is about to go bankrupt," the Hurriyet Daily News and Economic Review quoted Gul as saying Wednesday. "If someone's ability to pay is weak, they demand high interest. If the ability to pay is high, the interest demanded is low."

Greek 10-year government bonds yielded about 17 percent late Thursday, compared to about 3 percent for similar-maturity German bonds.

Its debt tops $497 billion.

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