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Greece passes key budget vote
By Derek Gatopoulos |
December 24, 2010, Friday
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Print Edition
Print Edition
GREECE'S governing Socialists won a key budget vote in Parliament yesterday, calling for deeper austerity measures in the crisis-hit country and promising to avoid default despite a soaring national debt.
Lawmakers early voted 156-142 in favor of the 2011 budget, braving a third year of recession to trim 5 billion euros (US$6.6 billion) off the budget deficit, through higher consumer taxes and cuts in health and defense spending. Two opposition parliament members were absent.
The latest cuts are needed for the country to continue receiving loans from the 110 billion-euro bailout fund created for Greece by European countries and the International Monetary Fund. But the government is facing growing hostility from Socialist-dominated unions and even critics within its own party.
Prime Minister George Papandreou insisted the austerity measures - including pay cuts for state workers, sale tax hikes, and axing labor rights - were working.
"We will not go bankrupt. In 2012 we will return to a path of growth ... we will not give speculators or ratings agencies the pleasure," he told parliament shortly before the vote.
The budget calls for continued tightening in Greece's 228.4 billion-euro economy in 2011, and is aimed at trimming the gap to 17 billion euros or 7.4 percent of gross domestic product.
But the country's debt-to-GDP ratio is set to exceed 150 percent next year, from 127 percent in 2009, leading to ongoing fears of eventual default.
Papandreou has promised to return to the bond market sometime in 2011, but warnings this month from three ratings agencies that Greek bonds are likely to suffer fresh downgrades have checked those expectations.
Labor unions, meanwhile, are stepping up protests.
The 24-hour strike on Wednesday by metropolitan transport workers caused morning traffic jams as commuters went to work by car or taxi. National rail workers also walked off the job, paralyzing train routes, though flights and ferries were not affected.
Outside parliament on Wednesday, about 1,000 people took part in a peaceful protest against the cutbacks, organized by Greece's two largest unions. Protesters held banners reading "Ban layoffs, write off the debt," and "Open-ended strikes until our final victory."
Many were transport employees incensed at salary cuts and the prospect of radical restructuring - without layoffs - for their state-run companies.
Lawmakers early voted 156-142 in favor of the 2011 budget, braving a third year of recession to trim 5 billion euros (US$6.6 billion) off the budget deficit, through higher consumer taxes and cuts in health and defense spending. Two opposition parliament members were absent.
The latest cuts are needed for the country to continue receiving loans from the 110 billion-euro bailout fund created for Greece by European countries and the International Monetary Fund. But the government is facing growing hostility from Socialist-dominated unions and even critics within its own party.
Prime Minister George Papandreou insisted the austerity measures - including pay cuts for state workers, sale tax hikes, and axing labor rights - were working.
"We will not go bankrupt. In 2012 we will return to a path of growth ... we will not give speculators or ratings agencies the pleasure," he told parliament shortly before the vote.
The budget calls for continued tightening in Greece's 228.4 billion-euro economy in 2011, and is aimed at trimming the gap to 17 billion euros or 7.4 percent of gross domestic product.
But the country's debt-to-GDP ratio is set to exceed 150 percent next year, from 127 percent in 2009, leading to ongoing fears of eventual default.
Papandreou has promised to return to the bond market sometime in 2011, but warnings this month from three ratings agencies that Greek bonds are likely to suffer fresh downgrades have checked those expectations.
Labor unions, meanwhile, are stepping up protests.
The 24-hour strike on Wednesday by metropolitan transport workers caused morning traffic jams as commuters went to work by car or taxi. National rail workers also walked off the job, paralyzing train routes, though flights and ferries were not affected.
Outside parliament on Wednesday, about 1,000 people took part in a peaceful protest against the cutbacks, organized by Greece's two largest unions. Protesters held banners reading "Ban layoffs, write off the debt," and "Open-ended strikes until our final victory."
Many were transport employees incensed at salary cuts and the prospect of radical restructuring - without layoffs - for their state-run companies.
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