Greece’s parliament on Tuesday approved the 2018 state budget, which includes further austerity measures beyond the official end of the country’s third international bailout next summer.
All 153 lawmakers from the left-led governing coalition backed the budget measures in a late vote, while the 144 opposition lawmakers present rejected them. Three were absent from the vote.
“We leave behind a period that no one wants to remember,” Prime Minister Alexis Tsipras told lawmakers at the end of a two-day debate in which his governing coalition were lambasted by opposition lawmakers for a tax blitz on the populace.
“For the first time, we know with certainty that this is the last bailout budget,” he added.
Tsipras promised that the country would smoothly exit the eight-year crisis that has seen its economy shrink by a quarter and unemployment hit highs previously unseen during peacetime.
The Prime Minister argued that international money markets — on whose credit Greece will have to depend once its rescue loan program ends — are showing strong confidence in the country’s prospects, with the yield on Greek government bonds dropping to a pre-crisis low of less than 4 percent.
“The way to exit [the crisis] is for our borrowing costs to return to acceptable levels so the country can finance itself without the restrictive bailout framework,” Tsipras said.
The budget promises Greece’s international lenders continued belt-tightening measures and high primary budget surpluses — the budget balance before debt and interest payments are taken into account.
It sets the primary surplus at 2.44 percent for 2017 and 3.82 percent for 2018, higher than previously estimated. The economy is forecast to grow by 1.6 percent in 2017 and 2.5 percent next year, helped by a return to growth across Europe.
Greece has relied on financial handouts from European Union creditors and the International Monetary fund since 2010. Its third bailout expires in August 2018, by which time it will be expected to finance itself from the markets.
Its economy lost about a third of output over a seven-year period but is gradually returning to growth.
Under its latest bailout review, the government has agreed to cut spending further, reduce pensions, complete an evaluation of public sector staff skills and qualifications and sell coal-fired power stations. It will tighten the rules for unions to call a strike.
Budget 2018 foresees new taxes and additional cuts in public spending.But it will also add new taxes and
“Greece is the only European country under a bailout and has the lowest growth in the eurozone … people wish that this budget will be the last one of your government,” said Kyriakos Mitsotakis, leader of the opposition New Democracy party.
Despite pressure by New Democracy that has already started a kind of “pre-elections campaign” promising taxes cuts when it will come into power, although it doe snot explain how the fiscal gap will be filled then. The government insists that next elections will be held when as officially scheduled in 2019.