Greek PM eyes re­cov­ery as law­mak­ers ap­prove bud­get

2017 a mile­stone year in tak­ing coun­try out of cri­sis: PM

Kuwait Times - - BUSINESS -

Greek Prime Min­is­ter Alexis Tsipras yes­ter­day 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 an agree­ment 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 one bil­lion eu­ros ($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 eu­ros 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.

‘Liv­ing night­mare’

The con­ser­va­tive New Democ­racy party, which has a dou­ble-digit lead in the polls, says Tsipras-who won two elec­tions in 2015 on a prom­ise to com­bat aus­ter­ity-was in re­al­ity op­posed to re­forms. “You’re the liv­ing night­mare of pro­duc­tive Greeks... the only thing you know is to levy taxes,” said New Democ­racy leader Kyr­i­akos Mit­so­takis. “This bud­get is proof you have no plan to take the coun­try out of the cri­sis,” he said, claim­ing that the leftist-led govern­ment had a track record of “tor­pe­do­ing” pri­va­ti­za­tion projects and scar­ing away in­vestors. “The sooner you leave, the bet­ter for the coun­try,” said Mit­so­takis.

But Tsipras in­sisted he was not go­ing any­where. “We have a four-year man­date that we will see through... to the fi­nal day,” the 42-year-old PM said. 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 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.

Sur­prise move

Fi­nance Min­is­ter Eu­clid Tsakalo­tos on Saturday said Greece counter-pro­posed a pri­mary sur­plus of 2.5 per­cent, and a fur­ther 1.0 per­cent in 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. 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 it as 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.

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