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Greek parliament approve 2011 austerity budget

Greek parliament approve 2011 austerity budget
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First Published: Thu, Dec 23 2010. 01 10 PM IST
Updated: Thu, Dec 23 2010. 01 10 PM IST
Athens: The Greek parliament on Thursday approved a 2011 budget that imposes yet more austerity on the debt-choked nation, hours after thousands took to the streets shouting, “We can’t take it any more.”
The bill targets a budget deficit of 7.4% of GDP next year, down from about 9.4% this year, through more spending cuts and tax increases, in order to put Greece in line with terms of the bailout that saved it from bankruptcy in May.
“We will do whatever it takes to succeed,” prime minister George Papandreou told lawmakers just before they started to vote. “We will change this country.”
The budget was approved on a strict party-line vote by the 156 ruling socialist party lawmakers in the 300-strong parliament.
Public transport ground to a halt in the capital Athens on Wednesday as about 3,000 protesters rallied peacefully in front of parliament to protest against wage cuts in the public sector and other steps meant to help stem a crisis that has shaken the euro zone, spread to Ireland and threatens others like Portugal.
“We have no hope, we are just drowning,” said Apostolos Kostopoulos, 46, a Public Power Corporation technician whose salary was cut. “Parliament is voting today on a budget that will plunge people deeper into poverty,” he said as others waved a large Greek flag covered with “For Sale” tags.
Another 2,000 people joined a separate anti-austerity march, but overall turnout was much smaller than in previous protests. Some Greeks questioned the point of countless strikes which have failed to divert the government from its austerity path.
“We don’t agree with austerity, but nothing is going to change. The government will not change policies just because we take to the streets,” said Susanna Apostolaki, 43, a secretary.
The new spending cuts and tax rises in next year’s budget build on an estimated 6 percentage points reduction of deficit in 2010.
But Greece is still set to miss its 2010 fiscal targets and the new measures have failed to calm fears about its ability to pull itself out of its crisis. Fitch agency said late on Tuesday it may cut the country’s credit rating next month to junk.
The leader of the main opposition party, the conservative New Democracy, told parliament that the 2011 budget and the European Union/International Monetary Fund bailout would fail.
“PASOK (the socialist party) is lying when it says that the (EU/IMF) memorandum will take the Greek economy out of the crisis. It will deepen the crisis,” Antonis Samaras said. “The government’s policy is reducing GDP more than it reduces the deficit.”
Spending cuts
Athens bus and subway drivers have been holding on and off strikes for two weeks and did not work at all on Wednesday, keeping Christmas shoppers from the city centre and adding to the strain of recession-hit retailers.
The socialists, who revealed a gaping budget deficit after coming to power last year, have braved public discontent and taken draconian measures to meet the EU/IMF rescue terms.
This year already, the government has cut public sector wages by about 15 percent, increased the retirement age, frozen pensions and cut public spending. But it has failed to boost tax collection as much as targeted, despite a hefty VAT increase.
Greece’s lenders say it is broadly on track with fiscal consolidation plans. But partly as a result of the measures, the economy is forecast to shrink 3% next year after a 4.2% drop in 2010, with unemployment jumping to a record 14.6% from an estimated 12.1% this year.
Greek stock markets were little changed on Wednesday after the Fitch warning. “It seems the market has already discounted the downgrade,” said Vasillis Vlastarakis, analyst at Beta Securities in Athens.
The move would bring Fitch’s rating in line with Moody’s and Standard & Poor’s, who already have sub-investment grade ratings on the country, and both are on review for further downgrades.
Papandreou said EU member states needed to deepen their cooperation to overcome the crisis or risk breaking up.
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First Published: Thu, Dec 23 2010. 01 10 PM IST
More Topics: Greece | Budget | Austerity | Bankruptcy | GDP |