Greece approves budget; attention turns to Troika

12/11/2012

Athens is in danger of default on Friday without a release of bailout funds.

By Andy Dabilis for Southeast European Times in Athens -- 12/11/12

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Greece Prime Minister Antonis Samaras thanks lawmakers after parliament approved the 2013 budget. [AFP]

With parliament's approval on Sunday (November 11th) of a reduced 2013 budget, Greek officials appear to have done their part to unlock a 31.5 billion euro tranche of bailout funds from EU-IMF-ECB Troika.

The budget, which includes 9.4 billion euros in cuts, was approved just four days after a vote on additional austerity measures opposed by many Greeks narrowly passed through parliament.

"The second decisive step has been taken, now it is time for growth and recovery," Prime Minister Antonis Samaras said.

Finance Minister Yannis Stouraras promised parliament that the budget would guarantee Troika funds – the government risks default on Friday, when it must repay a 5-billion-euro note.

"I assure you in the most categoric manner that the tranche will be released in an imminent fashion," Stouraras said.

Eurozone finance ministers were to begin discussing on Monday if Greece has met the list of conditions set by creditors to release the funds. Aid from the Troika has been frozen since June.

Even with the bailout, the deepening austerity measures will be felt by Greeks.

Three previous rounds of pay cuts, tax hikes and slashed pensions have pushed unemployment to a record 25.4 percent -- 58 percent for those younger than 25 -- closed 68,000 businesses and shrunk the GDP 25 percent in two years.

The new budget slashes pay and pensions again, raises the retirement age to 67, eliminates holiday bonuses, reduces lump sum payments to retirees by 83 percent and sets out plans to lay off 2,000 workers by the end of the year and 25,000 more in 2013.

"These austerity measures will have a hard effect on recession. They affect GDP drastically and affect the debt sustainability," Aggelos Tsakanikas, head of research for the Athens-based Foundation for Economic and Industrial Research, told SETimes. He said Greece needs investment funding and restored liquidity. "This is the only way we can rebound our economy and refuel growth," he added.

While the Troika -- led by Germany Chancellor Angela Merkel -- has pursued austerity as the means to save Greece and prevent jeopardy to the Eurozone, even those who support the measures worry they will work.

"The economy will start developing again, but the difficulty for the government is to remain consistent," Antonis Klapsis, head of research for the Konstandinos Karamanlis Institute for Democracy in Athens, the think-tank for Samaras' New Democracy Conservatives, told SETimes.

Panayiotis Economou, 68, a retired shipyard worker, said his pension has been cut 25 percent. "I've stopped going out," he told SETimes. "I used to eat out but I don't do that anymore."

Samaras has vowed these austerity measures will be the last. Even the Troika has doubts that despite constant cuts Greece can reduce its deficit from 9.3 to 3 percent in two years and lower its debt-to-GDP ratio from near 180 percent now to the target of 120 percent by 2020. And then there's a mountain of 340 million euros in debt.

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Alex Afouxenidis, a political sociologist at the National Centre for Social Research in Athens told SETimes that, "Historically, the IMF's economic agenda has been a complete failure, but this [crisis] is more of a political project than an economic one. There is no way that the country can recover [in the foreseeable future] from this."

Dissent over austerity has weakened Samaras' uneasy coalition government. He ejected one of his party members while one of his partners, the PASOK Socialists, saw seven dismissed for voting against it, and another quit. The other partner, the Democratic Left, voted present but is waffling in its support.

Maria Vlahaki, 48, a civil servant with three teenage children, said her family has suffered from a 30 percent pay cut she's taken. "We limited our holidays to three days because we needed the money to pay the taxes," she told SETimes.

"We've cut back on clothing, going out and everything," she added. When she read that tax evaders were still largely escaping punishment, she said it hurt even more. "I feel like an idiot for paying," she said.

This content was commissioned for SETimes.com.
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