NEWS

Greek Parliament passes 2015 budget as leaders clash

By Nikos Chrysoloras & Paul Tugwell

Greek lawmakers approved the country’s first budget in decades forecasting almost no deficit, as euro-area finance ministers prepare to meet in Brussels to discuss a potential extension to Greece’s bailout program.

Of the 300-seat parliament, 290 lawmakers voted on the plan yesterday. Those in favor numbered 155; 134 voted against, and one expressed no view, according to results read out by the speaker, Evangelos Meimarakis.

“We are exiting the era when bond markets were closed to us and we needed bailout loans to survive,” Prime Minister Antonis Samaras told lawmakers before the vote. “Greece is now becoming a gateway for trade between Europe and the Far East.”

The plan sees 2.9 percent growth in gross domestic product by 2015, one of the fastest growth rates in the euro area, as Greece is on track to emerge this year from the longest and steepest recession in more than half a century. The government will post a budget surplus before interest payments equal to 3 percent of GDP. While general government debt is projected to fall to 171.4 percent of GDP from 177.7 percent this year, it will remain the highest in the European Union.

A few hundred protesters gathered under the rainy skies of Athens, outside the Greek parliament, calling for an end to austerity, while lawmakers were debating the budget.

“The government doesn’t have right to commit the country” anti-bailout opposition Syriza party leader Alexis Tsipras said yesterday evening, before the midnight vote, adding that decisions taken won’t bind his party.

Bailout Exit

The government, trailing in polls to Syriza, and with a constitutional impasse over a new president likely to trigger snap elections early next year, is pushing to exit its unpopular bailout program at the end of 2014. Samaras has vowed to replace regular emergency loan disbursements with precautionary credit lines from the International Monetary Fund and the European Stability Mechanism, which will come with fewer strings attached than the current program, and will only be used if the country’s borrowing costs spike.

Greece first needs to agree with the troika of officials representing the country’s lenders - the European Commission, the European Central Bank and the IMF - on the measures required to complete the last review of the current program, paving the way for the disbursement of about 7 billion euros ($8.6 billion) in aid outstanding.

This review, which started in September, remains stalled, as the country’s creditors raise doubts about the projections of next year’s budget, and ask Greece to adopt more budget savings in order to ensure that it meets its targets.

Political Pressure

Euro-area finance ministers meet in Brussels today and tomorrow to discuss a possible extension to allow the completion of the last review before the current bailout expires, on Dec. 31. While an extension is possible if Greece requests it, there is political pressure for a quick completion of the review before euro-area parliaments’ recess for the holiday season.

“A technical extension is a possibility. We did the same for Portugal,” Dutch Finance Minister Jeroen Dijsselbloem told lawmakers in The Hague last week. “This could be the case for Greece. But I can only say that if and when the fifth review will be finalized” said Dijsselbloem, who also chairs meetings of euro-area finance ministers.

[Bloomberg]

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