Greek parliament OKs reforms in exchange for aid, debt relief

EU’s Moscovici hails Greek austerity vote as ‘key step’

ATHENS, May 23, (Agencies): Greek lawmakers approved tax increases and a new privatisation fund on Sunday and freed up the sale of non-performing loans in exchange for much-needed bailout loans and debt relief.

Athens hopes the measures, two days before a key euro zone finance ministers meeting, will help it unlock the funds it needs to pay IMF loans, ECB bonds maturing in July and increasing state arrears.

“Greeks have already paid a lot, but this is probably the first time that the possibility of these sacrifices being the last is so evident,” Prime Minister Alexis Tsipras told lawmakers before a vote in parliament.

His left-led coalition, re-elected in September on pledges to implement the terms of a 86-billion euro bailout it signed up to in July, has a narrow majority of 153 lawmakers in the 300-seat parliament.

The coalition voted in favour of the reforms with only one MP against some articles on the new privatisation fund and a contingency mechanism of spending cuts that will be activated only if Athens looks set to miss its fiscal targets.

Syriza MP Vassiliki Katrivanou later resigned saying in a post she uploaded on Facebook that: “we are implementing measures and policies which are against the core of our values.” Her resignation will not affect the government’s majority since she will be replaced.

The taxes will hit Greeks where it hurts, with increases in value added tax by one point to 24 percent, more tax on fuel, tobacco, internet usage and an extension of a property tax.

Hundreds of demonstrators rallied outside parliament in the evening to protest against the reforms.

“It’s a disaster!,” said 60-year old businessman Panayiotis Kehris. “We will cut down on everything, from food to driving.”

To appease the angry public, Tsipras told lawmakers that each time Athens exceeds its annual primary surplus targets, the extra state revenues would go to a social solidarity fund. About 700 million euros would go to the fund this year, he said.

Talks between Athens and its foreign creditors over the reforms have dragged on for months, mainly due to a rift between the EU and the IMF over Greece’s fiscal progress and resistance in Athens to unpopular measures.

The IMF says Greece cannot achieve a 3.5 percent primary surplus target in 2018 or later unless it gets substantial debt relief and takes upfront measures. It has set both as conditions for its participation in the bailout.

EU lenders, eager to wrap up the negotiations quickly and avoid a new crisis in the bloc, insist the targets are feasible but euro zone paymaster Germany needs the IMF to be involved.

To help break the deadlock, Athens has included a contingency mechanism of spending cuts, which will be activated if it is set to miss its bailout targets. The IMF has yet to approve it, a source close to the lenders said.

EU Economic Affairs Commissioner Pierre Moscovici on Monday hailed a new batch of Greek austerity measures as “key” to unlocking bailout funds.

“A key step has been taken ... towards the conclusion of the first stage of the Greek programme,” Moscovici said in Paris, a day after Greek lawmakers voted in favour of spending cuts and tax hikes.

Eurozone finance ministers are set to discuss easing Greece’s debt burden and disbursing the next round of funds at a closely-watched Eurogroup meeting in Brussels on Tuesday.

“I hope and wish for an agreement at the Eurogroup meeting,” he told a news conference.

Greece and its European Union creditors are locked in talks on how to reduce the country’s debt burden, which the International Monetary Fund (IMF) said must happen if it is to contribute any more of its own funds.

The IMF said last week that Greece would need a lengthy period free from debt payments to achieve sustainable finances if the bloc does not agree to cutting the debt up front.