Greek parliament approves more austerity to unlock bailout funds, debt relief

Greek police officers shout slogans blocking a parliament entrance as they take part in a general strike. Athens, 17 May. [Yannis Kolesidis/EPA]

Greek lawmakers on Thursday (18 May) approved pension cuts and tax hikes sought by the country’s lenders to unlock vital financial aid, as angry demonstrators protested outside parliament over new austerity, the latest since the country plunged into crisis seven years ago.

The leftist-led government hopes that legislating the measures, four days before eurozone finance ministers meet in Brussels, will convince its lenders to release a €7.5 billion bailout tranche and grant it further debt relief.

It is now up to the lenders to make good on their promises, Prime Minister Alexis Tsipras told journalists.

“We deserve and we expect from Monday’s Eurogroup a decision regulating debt relief which will correspond to the sacrifices of the Greek people,” he said, referring to a meeting of eurozone finance ministers on 22 May.

Lenders have agreed in principle to debt restructuring but not on details.

Eurozone to mull Greek debt relief once reforms take place

Eurozone governments will consider medium-term debt relief for Greece as promised in a statement in May 2016 once Athens implements the reforms it agreed to earlier this week, a eurozone official said on Thursday (4 May).

Shortly before the measures were approved just before midnight, some protesters hurled petrol bombs and firecrackers at police guarding the legislature. They responded with tear gas.

Greece has seen its national output shrink by a quarter since it was first forced to seek external financial aid in return for spending cutbacks in 2010.

The government, sagging in opinion polls, hopes a conclusion by lenders of its reforms progress, coupled with a restructure to bring down a mountain of overhanging debt, will allow Greece to be included in the European Central Bank’s asset-buying programme and return to bond markets in the coming months.

Athens needs aid to repay debt maturing in July.

It agreed to adopt more austerity, which will be implemented in 2019 and 2020, to convince the International Monetary Fund to participate financially in its latest €86 billion bailout.

Greece, lenders reach long-awaited deal on bailout reforms

Greece and its foreign creditors reached a deal early today (2 May) on a package of bailout-mandated reforms, Greek Finance Minister Euclid Tsakalotos said, paving the way for the disbursement of further rescue funds.

To sweeten the pill, Tsipras has promised to offset the new measures with tax relief also legislated on Thursday. It will be implemented only if Greece meets its fiscal targets.

New austerity has drawn brickbats from the opposition, which has accused Tsipras of costly foot-dragging.

“You’ve become the best advertisement for austerity in Europe,” opposition Conservative leader Kyriakos Mitsotakis said, addressing Tsipras.

Greece has received about €260 billion in bailout aid since 2010 in exchange for reforms and deep spending cuts that plunged the economy in recession. The loans have helped balloon its debt, now at 179% of GDP despite a 2012 haircut.

The IMF has been reluctant to join Greece’s current bailout, saying it wants assurances that its debt will be sustainable.

Eurozone finance ministers will discuss these issues on Monday and assess Greece’s bailout progress following the parliamentary approval of the reforms.

IMF says EU still needs 'credible' debt relief for Greece

Despite an agreement reached Tuesday (2 May) on a reform package, Europe still needs to provide “credible” debt relief to Greece before the International Monetary Fund can provide more financing, an IMF official said.

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