Greek parliament approves new bailout deal
Despite the steps, a debt sustainability analysis says Athens may still be unable to implement the needed reforms.
Last Modified: 20 Mar 2012 23:44
The Communists and other left-wing parties oppose the agreement, saying it will cause further suffering [Reuters]

The Greece parliament has approved measures needed to receive a second package of emergency international loans as thousands of anti-austerity protesters rallied peacefully outside the building.

The rescue package, which combined with a first bailout will reach €172 bn ($226 bn), has already been approved at committee level.

It was passed easily in the 300-seat house with the support of the majority Socialists and conservative New Democracy, coalition partners in the government headed by former central banker Lucas Papademos.

The Communists and other left-wing opposition parties oppose the agreement, which they say will further increase suffering for ordinary Greeks.

Formed in November, the government was tasked with saving Greece from looming bankruptcy by securing the new bailout and seeing through a massive write-down of the country's privately held debt.

That mission will be completed in weeks, after which Papademos will call national elections. The Socialists will head into the election under the new leadership of Evangelos Venizelos, who resigned as finance minister on Monday after being elected to the party leadership the previous day.

The government is expected to announce a new finance minister, but has refused to specify when.

Despite the new bailout, a debt sustainability analysis by the International Monetary Fund, the European Commission and the European Central Bank warned that Athens may still be unable to implement reforms at the necessary pace.

The report obtained by The Associated Press news agency on Tuesday said the programme's balance of risks is leaning toward the downside scenario which would see debt falling to only 145.5 per cent of national income by 2020 even after taking into account the recent losses accepted by private holders of Greece's bonds.

The aim of the bond swap that will erase more than €100 bn from Greek debts held by banks, pension funds and other private investors, was to reduce the debt-to-GDP ratio to 120.5 per cent in 2020 - from the current 169 per cent.

While sky-high interest rates prevent Greece from raising cash through bond issues, the country is keeping a market presence through regular short-term debt auctions.

On Tuesday, the public debt management agency said borrowing costs dropped in a new 13-week treasury bill auction that raised €1.3 bn, with the country paying 4.25 per cent compared to 4.61 per cent last month.

So far, keeping Greece afloat has come at a high cost for the country's citizens, who have already seen their standard of living reduced by two years of austerity.

Greece has been dependent on a first €110 bn since May 2010. In return for the second bailout, already depleted pensions and salaries have been further cut, while the government pledged to abolish 15,000 public sector jobs this year.

Athens has also committed to raise €19 bn ($25 bn) by 2015 under an open-ended €50 bn ($65.7 bn) programme to privatise or develop state property.

On Tuesday, authorities launched an international tender to develop 186 hectares of coastal land, including a golf course, on the resort island of Rhodes. A similar process is under way for land on the island of Corfu.

The widely resented cutbacks have been compounded by a flurry of tax hikes, as authorities failed to adequately address rampant tax evasion and incompetent tax collection.

Labour unions have reacted with a string of strikes and protests.

Greek ferry crews, on strike for two days, voted on Tuesday to call off a series of rolling 48-hour walkouts over planned reforms to their pension fund. The decision followed talks with government officials. Seamen will return to work early Wednesday morning, their union said.

Staff at the state Sotiria hospital in Athens also walked off their jobs on Tuesday to protest the planned merger with a neighbouring hospital, while lawyers in many parts of the country launched a two-day strike.

Associated Press
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