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Greek lawmakers, despite heated debate, approved a package of economic changes and austerity measures early Saturday, taking a step toward unlocking the first slice of loan money from the country's nearly $98 billion international bailout program.
The legislation covers some of the economic changes sought by the country's international creditors, which include raising the retirement age, cutting pensions, liberalising the energy market, opening up cosseted professions, expanding a property tax that Greeks already revile, and pushing forward a stalled programme to privatise state assets.
Passing the package paves the way for Greece to receive the first Euro 2 billion, or about $2.3 billion, from the bailout programme.
It is only the first in a series of changes and austerity measures the Greek Parliament will be asked to approve in coming months to meet benchmarks set by Greece's international creditors, who plan to dispense money in allotments as the country hits those targets.
The several days of parliamentary debate on the measures were frequently tense, with the retirement changes and property tax among the provisions drawing fire from lawmakers, who said they would only increase the country's austerity burden.
Prime Minister Alexis Tsipras secured the support of all but one of the 155 lawmakers in the governing coalition, a slim majority of the 300-member Parliament. It is Tsipras's first real test since his re-election last month on a pledge to enforce Greece's third bailout as painlessly as possible.
"Our only concern is to protect the working classes," Tsipras told Parliament on Friday before the vote. "We will keep our promises."
In a speech to Parliament on Thursday, Tsipras's finance minister, Euclid Tsakalotos, indicated that things could have been worse. The Bill includes "12 to 15 measures whose approval is necessary to unlock the €2 billion," he said. There were nearly three dozen demands by the creditors that could have been included this time but were deferred for later.
As much as it needs the first dollop of loan money, Greece is also eager for the debt relief that the country's creditors have promised to consider. That consideration is supposed to follow the creditors' next review in the coming weeks of Greece's progress in carrying out changes deemed crucial to getting its battered economy back on track.
Before talks on debt can begin, an even tougher challenge looms. In the coming weeks, Greek lawmakers must endorse a second set of measures, including highly contentious plans to increase taxes for farmers and a broader overhaul of the Greek pension system, in exchange for an additional €1 billion, or about $1.13 billion, in loans.
Farmers have already staged protests.
The first set of measures was controversial enough. Demonstrations have played out on the streets, and labour unions rallied Friday night outside Parliament, protesting measures they warn will "crush" Greeks after five years of austerity that have slashed living standards and pushed unemployment above 25 per cent.
The most controversial changes are those affecting retirees. The bill approved early Saturday foresees the phasing out of early retirement for civil servants by 2022, so that all Greeks retire at 67, and introduces financial penalties for those who retire before the age of 67. Until now, civil servants have been able to retire much earlier. Military officers, for example, can stop working at 58.
Another disputed measure, which had foreseen an increase on the tax paid on rental income by Greek property owners, was hastily withdrawn ahead of the vote after an outcry from the political opposition and the association representing Greek property owners, many of whom are struggling to rent out their properties in a persisting recession. A provision that would have obliged property owners to pay tax even on rental income they have not collected was regarded as particularly outrageous.
The tax measures are expected to eventually be put to a vote, though.
Just hours before the vote, government officials were scrambling to identify measures that would replace plans for a 23 per cent sales tax on private schools, which Tsipras had promised to suspend in response to a public outcry.
But a despised property tax, introduced four years ago as an emergency measure, has been broadened to include most buildings and surrounding plots of land.
Government officials conceded that many of the changes were tough. They pledged to introduce new measures as soon as possible to offset the austerity.
Tsipras's political rivals responded in scathing tones. The main conservative opposition party, New Democracy, compared the government's efforts to those of Sisyphus, a Greek mythological figure eternally condemned to push a boulder up a mountain, only to watch it roll down again, over and over. Notably, many of the measures in the new bill had been promised to creditors by the previous New Democracy-led coalition but were never enforced.
Tsipras, originally elected in January on a promise to fight austerity, later backtracked and signed a compromise with Greece's creditors in July after months of torturous talks. His about-face led to a rebellion that split his leftist Syriza party and triggered general elections that Tsipras won after promising to implement Greece's third bailout while seeking to soften the impact of its harsher aspects.
According to a draft budget introduced this month, Greece's debt will exceed 180 per cent of gross domestic product this year and rise above 190 per cent of Gross Domestic Product (GDP) in 2016. Only Japan, which is able to finance its debt, has a higher ratio.
A projected Greek recession of 2.3 per cent this year is expected to ease only slightly next year, when the economy is forecast to contract by 1.3 per cent.
Greece's banks pose a particular problem, burdened as they are by a mountain of nonperforming loans and essentially unable to support the real economy. An assessment of Greek banks' capital needs by the European Central Bank is expected to be completed by the end of the month.
©2015 The New York Times News Service
