Share

Greece's 2011 austerity budget approved

Athens - Greek lawmakers early on Thursday approved an austerity budget, part of a tough economic overhaul imposed after the debt-hit country's international bailout, as thousands of protesters marched in Athens.

Some 3 000 unionists and Communists staged separate demonstrations on Wednesday to reject the economic blueprint containing over €14bn in savings for 2011 in a bid to restore balance to Greece's woeful public finances.

After five days of debates the budget was adopted by 156 votes to 142, with the ruling socialist Pasok in favour and the rightist New Democracy, communists, radical left and extreme right voting against.

The 2011 budget includes cuts in the badly mismanaged Greek health sector and state-owned companies, a two percent increase in the lower sales tax rate from 11% to 13%, a tax evasion crackdown, lower defence spending and a pensions freeze.

Prime Minister George Papandreou told parliament he was "determined" to make all the changes needed to pull the country out of crisis, saying: "Despite the difficulties I am optimistic, Greece will not go bankrupt."

He added in a televised speech: "Without the aid of the European mechanism, the country would have collapsed."

Papandreou appealed to all the opposition parties to "assume their responsibilities" and contribute to efforts to save the economy.

As the protesters marched on Wednesday the streets of the capital were already clogged with traffic due to a public transport strike - the fourth this month - against wage cuts and parts of the city were overflowing with rubbish after a sanitation walkout.

"The government is trying to pit social groups against each other," senior bus unionist Nikos Kouloumbaritsis told Flash Radio.

"We have suffered five wage cuts since January, nobody can consider living on a wage of €1 000," he said. "We are not stopping our mobilisation."

The minimum wage in Greece is €740.

Investors also doubt that Greece can fulfil its promises, despite having slashed its public deficit by some 6% of output this year.

One of the major rating agencies, Fitch, said on Tuesday it could downgrade its rating on Greece after a similar warning from another agency, Moody's, last week.

With thousands of jobs already lost, wages cut and prices climbing from tax hikes, the country's influential unions have hit back with seven general strikes this year and waves of street protests.

Fearful of further social unrest in the midst of the festive season, the government has opted to postpone to early next year a controversial reform to liberalise scores of regulated professions.

Officials say that entry or pricing restrictions in these sectors have stymied competition for decades but many of the professionals targeted in the reform, including notaries, pharmacists, engineers and architects, counter that the measures will harm service quality and have pledged to resist them.

The economic overhaul has been mandated by the European Union and the International Monetary Fund which in May extended Greece a €110bn loan when the country came close to bankruptcy.

The money is released in instalments conditional on Greece making progress in its reforms.

Under the terms of the rescue, Greece agreed that its public deficit would be reduced to 7.6% of Gross Domestic Product in 2011, aiming to eventually reach the EU limit of 3%.

But additional measures became necessary after the 2009 public deficit was revised upwards last month to 15.4% of GDP from the previously given 13.6% by Eurostat, the EU statistics agency.

The result is that the 2010 shortfall will now be 9.4% of output, above the 8.1% target.

As a result, Athens has had to find extra savings to keep its finances on track to meet the 2011 target.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.96
-0.3%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.48
-0.1%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
898.45
-0.8%
Palladium
1,000.75
-0.1%
Gold
2,194.06
-0.0%
Silver
24.50
-0.6%
Brent Crude
86.09
-0.2%
Top 40
67,881
+0.3%
All Share
74,113
+0.3%
Resource 10
56,213
+1.0%
Industrial 25
103,534
+0.3%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders