Greece to adopt more cuts, tax hikes for bailout cash
With more than 10,000 people protesting over a string of unpopular reforms outside the Greek parliament, lawmakers from the ruling leftist party are to approve Sunday night a bill of over 7,000 pages that raises the sales tax cap and introduces a mechanism to slash spending further in case of budget overruns.
The contingency mechanism in the new legislation, labelled “the cutter” by Greek media and designed to cut state spending if the country fails to meet fiscal targets, is of chief interest to Greece’s international creditors.
Greece has pledged under its latest EU bailout to bring its primary budget surplus, which excludes debt payments, to 3.5 percent of gross domestic product by 2018.
Should Athens fail to reach its fiscal targets, it must resort to the new mechanism to save up to two percent of output in a fiscal year.
‘It’s raining taxes’
People on all sides of Greece’s political divide have criticised the sweeping reforms, the latest in a string in recent years.
Earlier this month, tens of thousands took to the streets to protest against an equally unpopular pension reform and tax hike.
“Let’s overturn austerity” and “The new austerity measures won’t pass” read some of the banners the thousands of protesters were brandishing on Sunday.
“No one in Greece will remain unaffected by the typhoon of the new measures”, Kyriakos Mitsotakis, the leader of New Democracy main opposition party said on Sunday speaking in the Greek parliament.
“Employment is punished, property is prosecuted”, he added.
Greek newspapers on Sunday voiced criticism over the fact that the new taxes and cuts, which also include a maximum VAT hike from 23 to 24 percent, don’t come with a promise from the country’s international creditors of debt relief.
“It’s raining taxes, with the future of debt uncertain,” read a headline in Kathimerini newspaper.
“The measures we are talking about aren’t pleasant. Especially for citizens that have already endured a lot,” Prime Minister Alexis Tsipras admitted on Sunday.
But he said “this is the first time that the sacrifices seem to have a prospect to pay off”.
Tsipras also stressed that “this is the first time the debt issue is discussed with the appropriate attention within the international institutions”.
Greece and its European 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 Thursday that Greece would need a lengthy period free from debt payments to achieve sustainable finances if the European Union does not agree to cutting the debt up front.
“It is possible to restore debt sustainability without upfront haircuts, although this would involve providing very concessional loan terms including long grace and maturity periods and very low interest rates,” IMF spokesman Gerry Rice told reporters.
No relief?
As for the IMF’s participation in the rescue, Rice said the global emergency lender is still assessing the reforms Athens is undertaking to strengthen its finances.
“We don’t want more austerity for Greece and we certainly don’t want more of the burden to fall on the poor and the most vulnerable,” he said.
The Greek government, at loggerheads with its creditors as it seeks to obtain some relief, appears confident.
But EU economic powerhouse Germany has been deeply opposed to alleviating any of Athens’ debt.
It believes Greece should be granted relief only in 2018, once it has fully complied with the EU bailout, according to a finance ministry document seen by AFP Thursday.
Greece is due to repay big loans to the European Central Bank (ECB) and IMF in July, and has already fallen behind in paying for everyday government duties and public sector wages.
German financial daily Handelsblatt this week said Athens could receive between nine and 11 billion euros if a deal is struck next week.
– AFP
Mukah Pages bring you trending news media with Free Malaysia Today http://ift.tt/243Hy7R
Post a Comment