Greece passes fresh spending cuts to secure debt deal

Wednesday, February 29, 2012

Athens -The Greek parliament on Tuesday passed a fresh package of spending cuts to secure the release of a second bailout package to avoid a bankruptcy in March, Deputy Speaker Grigoris Niotis announced.

With the support of the two parties backing the interim government of Lucas Papademos, the bill containing the additional cuts to pensions and wages was approved with 202 votes in a roll call vote at the 300-member assembly. Among 283 deputies present, 80 voted against and one abstained.

The new reductions on main and auxiliary pensions ranging from 12 to 20%, fresh freezes and reductions on salaries of civil servants and a 22% cut to the minimum monthly wage in the private sector with retroactive effect from mid-February - as decided earlier on Tuesday during a cabinet meeting - are promoted in order to slash deficits and boost competitiveness.

The 3.2 billion-euro ($4.3 billion) worth measures are part of so-called "prior actions" requested by international creditors before the release of the vital 130 billion-euro aid package, the second since May 2010 to address the severe debt crisis.

European Union (EU) leaders are due to examine later this week in Brussels the progress Greece has made regarding the preconditions of the bailout deal clinched earlier in February and the implementation of an accompanying plan to ease the Greek debt load, known as the Private Sector Involvement (PSI).

Until then, Greece rushes to ratify the final austerity and reform policies demanded, while some parliaments in European countries in the meantime are scheduled to approve the bailout agreement as well, following a positive result in the German assembly on Monday.

Debt-ridden Greece is under mounting pressure to secure the aid to cover a 14.5 billion-euro bond repayment on March 20 to avoid a financial collapse that could have significant repercussions on the euro and the global economy.

International ratings agency Standard & Poor's downgraded the ailing economy's credit rating to "selective default" on Monday over the write-down plan with private creditors due to clauses that could be activated to force unwilling bondholders to participate in the process that started last Friday and is due to be completed by mid-March.

Greek officials face increasing domestic pressure as well, since the new round of harsh austerity and reform measures has sparked a new wave of strong reactions by trade unions.

As the parliament is expected to vote on Wednesday evening on the merger of auxiliary pension funds and reforms on closed professions, such as pharmacists, the umbrella unions of private and public sector workers GSEE and ADEDY called for work stoppages and a rally in central Athens on Wednesday afternoon.

Policemen and fire fighters staged a demonstration against the further austerity on Tuesday afternoon, while doctors working in state hospitals called for a 24-hour strike nationwide for Wednesday.

Greece has been kept afloat with foreign aid over the past two years, but citizens protest that the painful terms attached have strangled the average household and business with cutbacks on incomes and tax hikes that have fuelled recession.

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