More budget cuts in Greece

Cuts and more cuts: Athens passes 2013 budget

The Greek government has passed a 2013 budget stipulating new rounds of harsh budget cuts. It comes just after Greece announced the passage of more austerity measures, triggering violent clashes in Athens.

RT,

12 November, 2012

The budget was approved with 167 voting in favor and 128 opposed, while 5 abstained.

The recent austerity package, passed in a narrow vote, was apparently insufficient to appease eurozone finance ministers into granting the cash-strapped nation another tranche of much-needed bailout money.

Without the rescue loan, Greece would effectively default on November 16, the date it must repay a three-month treasury bill worth €5 billion.

Greek trade unions called for another demonstration outside Parliament on Sunday ahead of the lawmakers’ vote on the budget.

Earlier in the week, around 70,000 demonstrators rallied as Parliament voted on the new austerity program.

On Saturday, MPs began debating the 2013 budget. It was the second budgetary test the Greek government has faced in less than a week.

Athens is planning further spending cuts totaling 9.4 billion euro, mainly in state wages, pensions and benefits, all of which have already seen drastic reductions over the past two years.

Several hundred Greek civil servants staged a protest on Saturday in front of parliament, where initial discussions over the 2013 draft budget were held ahead of the vote. The protesters railed against the reduction of 125,000 civil servant jobs by 2016, part of the new austerity package that squeezed through parliament on Wednesday.

Cutting it close

Greece's 2013 budget predicts that the economy will shrink by a worse-than-expected 4.5 percent next year, and that the country's debt will swell to 346 billion euro ($434.3 billion), or 189 percent of the country's gross domestic product.

Athens is hoping to securing a further 31.5 billion euro of desperately needed international aid. Even then, it would still need to borrow over 68 billion euro next year, the draft budget says

This is in addition to the new austerity package, which includes 18.5 billion euro ($23.6 billion) in cuts and labor law reforms.

Greece has so far avoided default by introducing a series of austerity measures needed to secure two huge bailout loans from a 'Troika' of creditors: The EU, the International Monetary Fund and the European Central Bank.

The recent push for further austerity has sparked popular anger in a country facing its sixth year of recession, while unemployment rose above the 25 percent mark in July.

Meanwhile, the government admits that the program is unfair, and will probably drive the country deeper into recession, Dimitris Yannopoulos, an Economist and Editor at the Athens News newspaper told RT.

According to Yannopoulos, the only benefit the new set of austerity measures will bring is the long-awaited rescue package – which Germany is in no hurry to release.

“Berlin implies that we want more conditions attached to the program dealing with the control of these funds as well as the control of the budgetary administration [in Greece],” he explained.