Wednesday, June 26 2019


Greece passes budget that pits optimists against creditors

Update: December, 08/2014 - 11:00

ATHENS – The Greek parliament early on Monday adopted a budget for 2015 that was a victory for politicians ready to celebrate the glimmer of returned growth over warnings from international creditors that such a move may be premature.

The budget, which forecast 2.9 per cent growth and a deficit of 0.2 per cent, was passed by 155 votes for and 134 against after a late-night session.

However, Greece's "troika" of creditors – the European Commission, European Central Bank, and International Monetary Fund – had regarded those estimates as overly optimistic for an economy that shrank by 25 per cent since 2008, and had urged Athens to hold the line.

Greece's creditors have said that the country's deficit will be closer to 3.0 per cent of GDP, and warned against proposed tax cuts when Athens will need to find an additional 3 billion euros (US$3.69 billion) in revenue just to meet its financial targets.

With Greece awaiting delivery of 1.8 billion euros ($2.21 billion) in additional loans from creditors, the government of Prime Minister Antonis Samaras had been wary of crossing troika members who have already extended Athens 240 billion euros ($294.8 billion) in bailout funds since 2010.

"I am confident that we will soon arrive at an agreement" with the troika, Finance Minister Ghikas Hardouvelis told the assembly.

"Our differences with the calculations of the troika are much reduced," he said, echoing comments by Samaras.

The budget vote came as Athens was assessing the damage Sunday after a night of protests that degenerated into violence on the sixth anniversary of the police killing of a teenager, with nearly 300 people arrested.

The tussle over the 2015 budget had also jeopardised Greek hopes to exit bailout restrictions any time soon.

When Athens voiced desire to do so in response to returning growth in October, markets spooked at the idea of Greece freed of outside control sent Greek bonds plummeting.

Since then, Athens has agreed to remain tied to European assistance in 2015, and respect its commitments to the IMF running through 2016, but continued tension and uncertainty over the form of the proposed budget have nerves on all sides frayed.

"There's disagreement on the budget, financing needs, scheduled payment of back taxes, VAT, and unfortunately lots of other questions," Thomas Wieser, Austrian president of the Euro Working Group of EU finance ministers, told RealNews Sunday prior to the vote. — AFP

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