Greek Lawmakers Approve New Budget — With More Austerity
Greek lawmakers approved the heavily indebted country’s budget for 2019 late Tuesday, the first since Greece exited an eight-year bailout program.
The budget lawmakers passed with a 154-143 vote still is heavy on austerity measures to ensure Greece registers a hefty surplus, in compliance with its debt relief deal with international creditors.
Earlier Tuesday, government spokesman Dimitris Tzanakopoulos said the proposed budget was Greece’s first in 10 years to be drafted “under circumstances of relative financial and political freedom” from bailout creditors.
“Today we have the opportunity to vote for a budget that now reflects the priorities of the Greek government, and not of [its] supervising institutions,” he said during a parliamentary debate.
As the debate drew to a close, more than 2,000 people demonstrated peacefully outside parliament in two separate protests called by labor unions.
The budget submitted by the left-led government foresees Greece’s battered economy growing 2.1 percent in 2018 and 2.5 percent in 2019. The debt load is set to decline from 180.4 percent of output this year to 167.8 percent next year.
Greece owes most of that debt to European partners and the International Monetary Fund. The debt relief deal secured favorable repayment terms, but in return the country must achieve budget surpluses for decades to come.
The country also secured a cash buffer from creditors so it would not have to tap bond markets until the rates demanded by investors to buy Greek government bonds drop.
Prime Minister Alexis Tsipras told lawmakers Tuesday that the country is not locked out of bond markets by high borrowing costs — even though his government has so far shelved stated plans to issue bonds shortly after the end of Greece’s last bailout, in August.
“[It] is a myth” that Greece can’t tap bond markets, Tsipras said. “You can be certain that we will again make a market exit, with a very good rate.”
Greece depended on bailout loans from 2010 until August 2018, and imposed crippling cutbacks to secure the money. Its finances are still subject to creditor scrutiny, albeit less intense than before.
Tsipras’ government is playing up citizen assistance programs that are intended to bring some 900 million euros in tax cuts and welfare benefits to less well-off Greeks. The money for the relief measures is supposed to come from a surplus generated by high taxes and constrained public spending.
However, labor unions say that’s not enough.
“Funding in the budget both for education and for health is much lower than our expectations,” Giannis Paidas, head of the Adedy civil servants’ union, said during the smaller of Tuesday’s two central Athens protests.
“It is the same and worse as during previous bailout-era years,” Paidas added. “There will be a 1 billion-euro increase in taxation. As you understand, this increase will burden working Greeks.”