Greece clears last batch of reforms

Athens approaches end of int’l bailout

ATHENS, Greece, June 18, (Agencies): Greek lawmakers approved Thursday the last batch of economic reforms required by creditors, as the country approaches the end of its international bailout.

The lawmakers voted 154-144 in favor in the 300-member parliament to approve the bill, which includes a raft of reforms on issues, from pension cuts to health care and tax reforms. During the parliamentary debate ahead of the vote, around 3,000 demonstrators marched through central Athens in protest.

The bill was the last step Greece’s government was required to make ahead of a meeting next week of finance ministers of the 19-nation eurozone, where Greece and its creditors are to reach a final deal on its bailout exit.

Greece is to emerge from its third and final bailout on Aug 20, after eight years of relying on emergency loans from international creditors. In return for the funds it received, mostly from other eurozone countries but also from the International Monetary Fund, it had to make repeated rounds of deep spending cuts, structural reforms and privatizations through the years. Its economy has been under strict supervision, with creditors carrying out regular reviews.

“Today’s parliamentary session is of a historic nature. After eight years we are voting on the last measures of the last review,” Prime Minister Alexis Tsipras said in parliament. “We honored our commitments, the credibility of the country has been restored and Greece finishes with (its bailouts) this coming August.”

The repeated rounds of austerity measures have been met with frequent protests in Greece, whose economy has contracted by about a quarter since its financial crisis began in late 2009.

European Commission Vice President Valdis Dombrovskis, who met with Tsipras in Athens Thursday, said creditors were working on reaching a final deal on the bailout exit at the finance minister’s meeting on June 21.

“Two months from now, Greece will complete its program,” Dombrovskis said. “It will be a delicate, yet perfectly doable exercise, provided that all parties show commitment and act responsibly.

Once the bailout is over, Greece will have to finance itself by borrowing on international bond markets. The country has long sought some relief on the rescue loans it has to repay to its creditors, which are mainly fellow eurozone states.

“There needs to be an agreement on the debt measures,” Dombrovskis said. “Upfront debt measures would be important for ensuring Greece’s gradual return to the markets.” He also stressed the country must “stay the course of reforms” to ensure economic growth.

The Greek government has committed to continuing reforms after the end of the bailout, but has resisted the idea preferred by some, including the country’s central bank, of taking a so-called precautionary credit line — a backup loan it could use as it eases back into international bond markets.

A credit line would likely involve further stringent government austerity measures and heavier international oversight, which would make it politically unpopular. Instead, the government has insisted on a “clean exit” from the bailout.

Greece is due to exit its latest bailout programme in August and will then have to rely on financial markets to cover its borrowing needs.

The country has a debt-to-GDP ratio of 179.8 percent, the highest in the 19-nation eurozone.

Athens is keen to pass the final review of the country’s compliance with reforms prescribed in its bailout before a eurozone finance ministers meeting on June 21.

A green light on the review would release about 12 billion euros ($13.97 billion) of new loans from Greece’s latest 86 billion euro bailout, its third since 2010.

The final payment from the bailout funds would add to a cash buffer the Greek government is creating and could serve as a fall-back option for refinancing needs.

Lawmakers passed the reform package 154-to-144 in the 300-seat parliament. It was endorsed by lawmakers of the leftistled alliance while all other opposition parties voted it down.

“This government smothered Greeks with taxes. It crushed growth and pushed the middle-class to poverty,” said conservative opposition leader Kyriakos Mitsotakis during a heated debate on the reforms bill.

“You created a large mass of desperate people who are drowning in debt and have no hope for the future,” he said.

Athens has agreed to adhere to a postbailout fiscal trajectory that targets primary budget surpluses — excluding debt servicing outlays — of 3.5 percent of GDP until 2022 and of at least 2.0 percent thereafter.

This gives the government little room for manoeuvre for tax relief unless it fiscally outperforms, generating even larger budget savings.

The reform package legislation includes measures to expedite privatisations in the energy sector and tweaks in real estate taxes. It also outlines measures that will go into effect in the post bailout period such as extra pension cuts in 2019 and a lower tax exempt threshold in 2020.