Greece passes new austerity budget
Legislators approve extending spending cuts and tax rises as protesters clash with police outside parliament building.
Last Modified: 07 Dec 2011 04:35
Protesters clashed with police outside the parliament as legislators debated new austerity measures [Reuters]

Greece's parliament has approved the government's 2012 budget intended to shrink the country's debt mountain with tax rises and spending cuts, hours after protesters against further austerity measures clashed with police outside parliament.

Three major parties backing Lucas Papademos, the prime minister appointed to lead an emergency government last month, voted early on Wednesday for the budget plan, a package of deeply unpopular measures intended to show foreign lenders the country is sorting out its finances.

"Successful implementation of this budget will restore the country's international credibility and create the conditions to rescue the economy," Papademos told legislators who approved the plan with an overwhelming majority of 258 out of 300 seats.

"We can't afford to keep whining... the targets are ambitious but feasible," he added.

Backing the budget, the opposition leader Antonis Samaras vowed to soften tax steps and boost growth measures if he won power in elections expected in February.

"Our disagreements remain... we are approving the budget because it is an absolute priority to safeguard the viability of Greek debt," Samaras, the leader of the New Democracy party.

Samaras has long opposed the austerity policies imposed by his Socialist rival, former prime minister George Papandreou, under a 110-billion euro bailout agreed in 2010.

The budget is designed to cut the deficit to 5.4 per cent of gross domestic product (GDP) from a projected nine per cent this year, and generate a surplus before interest payments, a key step to lower Greek debt.

Clashes with police

Meanwhile, as MPs were debating the budget, hundreds of masked protesters hurled petrol bombs and clashed with Greek police outside parliament after marching to mark the police shooting of a student in 2008, which led to the worst riots in decades and helped topple the then-conservative government.

Police fired teargas at the protesters who pelted them with broken pavement slabs, sticks and petrol bombs for nearly an hour on Tuesday afternoon.

A second bout of violence broke out when thousands joined an evening march, prompting police to use teargas again and form a cordon outside parliament.

More than two dozen people, including 14 policemen suffered minor injuries, police said.

At least 38 protesters were arrested and 11 were held on charges of attacking police officers and damaging private property.

Greece should narrowly avoid bankruptcy this month after European leaders and the International Monetary Fund agreed to pay the latest tranche of financial aid that had been held up for weeks over political squabbling in Athens.

Most Greeks expect their economic situation to worsen next year but they want to stay in the eurozone, polls show.

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