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Europe
Greek MPs pass austerity bill
Parliament approves controversial budget cuts intended to ease debt crisis.
Last Modified: 07 May 2010 04:22 GMT
Greece's parliament voted a day after violent protests left three bank workers dead [Reuters]

Greece's parliament has voted in favour of spending cuts and tax rises proposed by the government to address the country's financial crisis.

The measure, which will pave the way for Greece to receive a joint European Union-IMF emergency loan, was passed on Thursday with 172 votes in favour and 121 against.

The austerity bill later became law after it was approved in a second vote.

The voting came a day after three bank workers died in a petrol bomb attack as protests over the planned austerity measures turned violent.

As the bill was passed, thousands of Greeks gathered outside parliament in a clear show of anger at the measures, which include salary and pension cuts as well as tax hikes.

Some of the protesters hurled bottles and rocks and the police fired tear gas to disperse them.

'Avoiding bankruptcy'

"For the immediate future, this is the end of the matter and the government is telling the people that EU leaders will deliver a very generous aid package," Al Jazeera's Barnaby Phillips, reporting from Athens, said.

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  Wake-up call for Greek economy
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The new taxes and spending cuts have been demanded by the International Monetary Fund (IMF) and other European countries before debt-ridden Greece can get the $146bn bailout package of loans to keep it from defaulting.

Ahead of the vote, the Greek prime minister said the measures were the only way to avoid bankruptcy.

"The situation today is simple - either we vote and implement the deal or we condemn the country to bankruptcy," George Papandreou told parliament.

Papandreou has defended the measures, which foresee $38bn in savings, mainly from cuts to pensions and wages, saying the government will do everything possible to prevent Greece from defaulting.

"The future of Greece is at stake," he said.

"The economy, democracy and social cohesion are being put to the test."

He expelled three Socialist deputies from his parliamentary team for abstaining in the vote.

The expulsions still leave Papandreou with a majority of members in the house, with 157 of the 300 seats.

"The government has the responsibility of implementing the most difficult financial measures ever taken in this country," George Papaconstantinou, the finance minister, said.

Defaulting fears

Papaconstantinou has warned Greece is two weeks away from defaulting on part of its debt worth $12bn due on May 19.

MEASURES INCLUDE:

  Public sector
  All reductions in salaries, benefits and allowances apply to members of parliament, government officials and employees
  Freeze all public sector salaries until 2014
  Pensions/Retirement
  Limit or abolish early retirement
  Banning increases in public sector salaries and pensions for at least three years
  Taxes
  Increasing VAT from 21 per cent to 23 per cent
   Raising taxes on fuel, alcohol and tobacco taxes by 10 per cent
Source: Agencies

"The state's coffers don't have that money," he told parliament earlier.

"Because today the country can't borrow it from the international market.

"And because the only way for the country to avoid bankruptcy and suspension of payments is to take the money from our European partners and the International Monetary Fund."

But in order to receive the $146bn bailout, Greece must agree to the three-year austerity programme, he said.

The aim is to cut Greece's public deficit to less than three per cent of GDP by 2014. It currently stands at 13.6 per cent.

But the measures have angered ordinary Greeks and triggered regular protests.

Wednesday's deaths - the first such fatalities in protests in nearly 20 years in Greece - have also shocked many people in Greece.

Earlier during the day, Karolos Papoulias, the president of Greece, called on the country to turn back from the "brink of the abyss".

However, private sector unions have been undeterred by Wednesday's events, urging members to continue demonstrating.

Source:
Al Jazeera and agencies
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