Greek parliament begins debate on austerity measures amid wave of strikes
The Greek parliament has opened a two-day debate on tough new pension and tax measures demanded by bailout creditors amid a wave of unannounced strikes that shut down local media outlets, public transport and ferries to the Aegean islands.
A vote is due on Sunday night in the 300-member house, where the leftwing Syriza party of Alexis Tsipras, the prime minister, and his coalition partner, Independent Greeks, together control a fragile two-seat majority.
The premier unexpectedly brought forward the vote hoping to convince eurozone finance ministers meeting on Monday that Greece is now committed to completing a first review of its €86bn bailout after six months of foot-dragging over details of the reforms.
Greek officials were upbeat on Saturday about a call by Christine Lagarde, the International Monetary Fund chief, for negotiations to begin immediately on granting debt relief for Greece. At the same time, the Fund backtracked on earlier demands for another €3bn in “contingency” budget cuts, saying they were “fruitless”.
“It’s a positive development for Greece after weeks of fighting hard against the contingency measures,” said a senior Greek official. “Debt relief is expected to be part of the discussion on Monday.”
Sunday’s parliamentary vote refers to €3.6bn of spending cuts and income tax increases, together amounting to two-thirds of a €5.4bn fiscal package agreed with the EU and IMF.
The Syriza-led government will face another test when it presents further legislation on the remaining €1.8bn, to be covered through increases in indirect taxation. Measures under discussion include a one percentage point hike in valued-added tax to 24 per cent and higher fuel taxes.
With public sector unions stepping up strikes and a street campaign against the latest reforms, Mr Tsipras’s move for an early vote was also aimed at preempting possible defections by far-left lawmakers, a Syriza official said. This weekend’s walkouts shut down bus and metro services in Athens, while ferry strikes left thousands of tourists stranded on islands without airports.
The same official said the party was not anticipating defections by its lawmakers after the Group of 53, the main internal party opposition, made clear it would support the measures.
Rallying Syriza lawmakers ahead of the debate, Mr Tsipras claimed that after four months of often contentious negotiations with the EU and IMF the government had “brought off reforms that combine viability with social justice.”
The pensions bill, which aims to rescue the pay-as-you go state system from looming collapse, leaves current pensions in the state system untouched. It also introduces a new across-the-board “national pension” of €384 a month after 20 years of work. Both measures are in line with Syriza’s election promises to voters.
But supplementary benefits for current pensioners will be cut along with main pensions for new retirees. Social security contributions are set to rise sharply, with self-employed professionals such as lawyers and doctors facing the highest increases.
On income tax, the new legislation will streamline tax brackets, reducing the tax-free allowance and imposing a bigger burden on middle- and high-income taxpayers.