SALONIKA, Greece, Sept 11 (AFP) - Squeezed by a swelling public deficit and debt following last month's costly Athens Olympics, the Greek government said Saturday it would cut defence spending and boost revenue by 1.5 billion euros (1.84 billion dollars) in privatisation receipts.
"We are proceeding to a new plan of denationalisations that will yield the state around 1.5 billion euros next year," Prime Minister Costas Karamanlis told the country's business leaders in a speech on the sidelines of an international trade fair in the northern port city of Salonika.
The country's deposit-rich postal savings bank will be floated on the Athens stock exchange and a new attempt will be made to sell off debt-ridden Olympic Airlines, Karamanlis said, without identifying any further privatisation targets.
Greek defence spending will be cut by 400 million euros by 2005 and more cuts will follow by 2010, he added.
The Olympics cost Greece around seven billion euros and helped push the country's public deficit for 2004 to 5.3 percent of gross domestic product -- way above the three-percent limit prescribed by the eurozone of which Greece is a member.
Greece's public debt for 2004 will reach 112 percent of GDP, Karamanlis said Saturday, nearly twice as high as the eurozone's 60-percent target.
The European Commission has ordered Greece to spell out budget discipline measures by November.
Karamanlis' conservative government took office in March and immediately revised the previous socialist administration's budget figures which showed Greece well within eurozone limits.
The socialists had deliberately under-reported Olympics- and defence-related spending while overestimating social funds' suprluses, Karamanlis said Saturday.
The socialist opposition has in turn accused the conservatives of fudging the budget figures to tarnish their record in power. The socialist Pasok party had ruled Greece since 1993 and improved the country's finances to secure eurozone membership in 2001.
Karamanlis on Friday announced here a raft of publicly financed infrastructure projects in northern Greece to back up Salonika's bid to host the 2008 Expo global trade fair.