Greece to ap­prove new cuts for 2017 in par­lia­ment vote

Kuwait Times - - BUSINESS -

Greek law­mak­ers were to ap­prove a new round of pay cuts and tax hikes for 2017 de­manded by international cred­i­tors, with Athens hop­ing for an ECB stim­u­lus next year. The vote in par­lia­ment, ex­pected af­ter mid­night, will levy around one bil­lion eu­ros ($1.07 bil­lion) in ex­tra taxes on cars, fixed tele­phone service, pay TV, fuel, to­bacco, cof­fee, beer and other items.

Pub­lic spend­ing on salaries and pen­sions will also be cut by 5.7 bil­lion eu­ros next year. Thou­sands of Greeks took part in union demon­stra­tions and a gen­eral strike this week against the new cuts, but the left­ist gov­ern­ment ma­jor­ity is ex­pected to ap­prove the bud­get de­spite the mis­giv­ings of many of its law­mak­ers. Prime Min­is­ter Alexis Tsipras needs to stay on good terms with EU-IMF cred­i­tors to con­clude an on­go­ing re­forms au­dit early next year. Greece hopes that a deal will 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 eu­ros this year, ac­cord­ing to the lat­est EU data. But Ger­many, fac­ing pub­lic bailout 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 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. Tsipras on Thurs­day made a surprise move, an­nounc­ing a one-off pay­out to 1.6 mil­lion low-tier pen­sion­ers, and a sales tax break for is­lands shel­ter­ing thou­sands of mi­grants. The Euro­pean Com­mis­sion said it was “not made aware of all the de­tails of the an­nounce­ment be­fore they were made” and would need to study the 617-mil­lion-euro pack­age “be­fore com­ment­ing any fur­ther or act­ing fur­ther.”

Tsipras’ crit­ics at home im­me­di­ately de­nounced an elec­toral ploy, but the gov­ern­ment in­sisted this was not the case. “Europe owes a debt to (these is­landers), the Greek state owes them its sup­port,” Tsipras said in his an­nounce­ment, with of­fi­cials not­ing that the money would come out of 1.0 bil­lion eu­ros of tax sur­plus raised in 2016. Fi­nance Min­is­ter Eu­clid Tsakalo­tos yes­ter­day said Greece could man­age a pri­mary sur­plus of 2.5 per­cent, and ded­i­cate a fur­ther 1.0 per­cent to tax breaks for small and medium busi­nesses.

Tsakalo­tos on Saturday also praised Eurogroup chief Jeroen Di­js­sel­bloem, a fre­quent critic of the Tsipras ad­min­is­tra­tion, as a man of prin­ci­ple. “He may be harsh some times, but he keeps his word,” the min­is­ter told fi­nan­cial news­pa­per Agora. — AFP

ATHENS: Peo­ple shop at a green mar­ket in cen­tral Athens on Fri­day. The Greek Sea­men Fed­er­a­tion (PNO) de­cided to ex­tend its strike un­til De­cem­ber 11, 2016. All kinds of fer­ries and ships have been docked at the ports since De­cem­ber 2, lead­ing to short­ages on the is­lands and driv­ing farm­ers in out­rage as they can­not send their agri­cul­ture and food prod­ucts to the main­land or abroad. —AFP

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