ATHENS – Greece’s Parliament on Dec. 18 passed the country’s first post-bailouts budget – with more austerity that Prime Minister and Radical SYRIZA Alexis Tsipras swore wouldn’t happened – drawing fire from major opposition New Democracy leader Kyriakos Mitsotakis.
The two swapped charges over who was more irresponsible and to blame for economic woes with three international rescue packages of 326 billion euros ($371.79 billion) ending on Aug. 20 after eight years.
But the creditors, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and the Washington, D.C.-based International Monetary Fund (IMF) said that Greece’s economy will need monitoring for years to make sure fiscal targets are hit and that Tsipras doesn’t renege on reforms the way he did on anti-austerity promises.
The 2019 budget, with rosy predictions of a recovery and larger-then-expected primary surplus – which doesn’t include interest on the loans, the cost of running cities and towns, state enterprises, social security, some military expenditures and delaying payments to those owe money by the government – was approved by a vote of 154-143.
SYRIZA and its junior coalition partner, the tiny, pro-austerity, jingoistic Independent Greeks (ANEL) of Defense Minister Panos Kammenos, has 153 votes, including from one Independent lawmaker.
Tsipras said his government was determined to “finish its work,” and accused New Democracy of favoring the wealthy and privileged. “That is your ideology, that is your political plan,” he said, “the prosperity of those on top and the impoverishment of the rest.”
Despite having fallen out of favor for breaking his word to help the country’s most vulnerable, he said polls showing New Democracy with big leads are wrong and that he will re-election next year.
“It is not pollsters that vote in elections but the people who you looted, and in September 2019 they will be looking to the future with greater optimism,” he said in a swipe at New Democracy.
Mitsotakis fired back, accusing the government of “populism, demagoguery and politics without principles,” and said its budget propped up “unbearable (primary) surpluses,” promising he would cut taxes and social security contributions if elected.
“The cycle of decline is closing but Greeks will remember you for five things: lies, poverty, taxes, fear and scandals,” he told Tsipras.
Government spokesman Dimitris Tzanakopoulos said the proposed budget was Greece’s first in 10 years to be drafted “under circumstances of relative financial and political freedom” from bailout creditors.
“Today we have the opportunity to vote for a budget that now reflects the priorities of the Greek government, and not of (its) supervising institutions,” he said during a parliamentary debate without noting that it will be under supervision after the lenders shot down Tsipras’ claims there would be a so-called “Clean Exit,” without monitoring.
As the debate drew to a close, more than 2,000 people demonstrated peacefully outside Parliament in two separate protests called by labor unions, the latest among thousands of demonstrations and strikes since 2010 that have failed to move any government.
The budget predicts Greece’s battered economy growing 2.1 percent in 2018 and 2.5 percent in 2019. The debt load is set to decline from 180.4 percent of output this year to 167.8 percent next year of Gross Domestic Product (GDP) but despite the bailouts and a 2012 stiffing of investors of 74 percent of their holdings it is growing by the second.
A debt relief deal reached with the creditors will give Greece more time to repay but in return for hitting high budget surpluses for decades although Tsipras already is backsliding on promises and said he’ll hire thousands more public workers in what political rivals said was a transparent bid to buy votes after plummeting in polls for reneging on promises to help workers, pensioners and the poor.
Unable to return to the markets yet, the country is surviving on a cash buffer of 22 billion euros ($25.09 billion) that’s good enough to last only until June of 2020, with elections required to be held by October of 2019, putting pressure on Tsipras.
Tsipras told lawmakers the country is not locked out of bond markets by high borrowing costs — even though his government has so far shelved stated plans to issue bonds shortly after the end of Greece’s last bailout
“(It) is a myth” that Greece can’t tap bond markets, Tsipras said. “You can be certain that we will again make a market exit, with a very good rate,” without explaining why if that’s the case that he hasn’t authorized it yet.
Tsipras’ government is playing up citizen assistance programs that are intended to bring some 900 million euros ($1.026 billion in tax cuts and welfare benefits to less well-off Greeks with benefits far less than the losses they suffered under him.
The money for the relief measures is supposed to come from a surplus generated by high taxes and constrained public spending but labor unions said that’s not enough and they wat more relief.
“Funding in the budget both for education and for health is much lower than our expectations,” Giannis Paidas, head of the ADEDY civil servants’ union, said during the smaller of two central Athens protests.
“It is the same and worse as during previous bailout-era years,” Paidas added. “There will be a one billion-euro increase in taxation. As you understand, this increase will burden working Greeks.”
(Material from the Associated Press was used in this report)