Greek PM eyes recovery as budget approved
GREEK Prime Minister Alexis Tsipras on Saturday said the country was on the verge of economic recovery as lawmakers approved a new round of pay cuts and tax hikes for 2017.
“[Next year] will be a milestone in taking the country out of crisis, and this is the first budget of optimism, growth and recovery,” Tsipras told parliament. The PM said he was confident that a crucial EU-IMF reforms audit could conclude despite certain “absurd” demands.
Tsipras predicted a deal if all sides show political goodwill, and a return to debt markets early next year, but he refused to adopt labour market reforms “contrary to the European model”.
In the ongoing talks, the country’s international creditors – fellow EU states and the International Monetary Fund – have controversially called for legislation to make crippling strikes less likely while also making layoffs easy.
The new budget approved by 152 out of the 298 lawmakers present levies around 1 billion ($1.07 billion) in extra taxes on cars, fixed telephone service, pay television, fuel, tobacco, coffee, beer and other items. Public spending on salaries and pensions will also be cut by 5.7 billion next year. Tsipras needs to stay on good terms with EU-IMF creditors to conclude the reforms audit early next year. Greece hopes that a deal will finally persuade the European Central Bank (ECB) to include Greek sovereign debt in its asset purchase program, known as quantitative easing, or QE. Without access to QE, the country will not be able to make a planned return to debt markets by early 2018, according to the Greek Finance Ministry.
Last week, eurozone lenders approved short-term relief measures to help Greece manage repayment on its huge public debt, which will reach 315 billion this year, according to the latest EU data. But Germany, facing public bail- out fatigue and federal elections next year, has led a hardline stance among eurozone lenders to force Greece to adopt austerity reforms well beyond the end of its present bailout in 2018.
Hardline EU states also want Greece to run a primary surplus, after debt servicing, of 3.5 percent of gross domestic product (GDP), beyond 2018.
Athens has flatly refused to consider further austerity measures beyond 2018. Finance Minister Euclid Tsakalotos on Saturday said Greece counter-proposed a primary surplus of 2.5 percent, and a further 1 percent in tax breaks for small and medium businesses.