Greece to approve new cuts to secure cash, debt relief

Athens
18 May 2017

Greece's parliament today was to approve a new round of austerity cuts, hoping to secure a pledge of debt relief and loan payment approval by the country's EU-IMF creditors this month. Leftist Prime Minister Alexis Tsipras has a slim majority in parliament sufficient to pass the bill this evening. Overall, the bill to be approved entails 4.9 billion euros (USD 5.4 billion) in cuts in 2018-2021. Tsipras grudgingly accepted to legislate another round of pension cuts and lower tax breaks -- applicable in 2019 and 2020 respectively -- to unlock the cash payment ahead of looming debt repayments in July.
On Wednesday, at least 18,000 people demonstrated in Athens and Thessaloniki in union-sponsored protests against the bill. Another protest in Athens is scheduled on Thursday during the parliament vote. Athens hopes that the loan payment will be approved by a meeting of eurozone finance ministers on May 22. It also expects a clear eurozone pledge later this month on measures to ease repayment on its huge public debt, which represented 179 percent of annual output at the end of last year. Athens also hopes to be finally allowed access to the European Central Bank's asset purchase programme, known as quantitative easing, or QE, to help its return to bond markets. There is speculation that Greece plans to issue a three or five-year bond in July.
Bank of Greece governor Yannis Stournaras this week said the European Central Bank was likely to discuss the issue provided that European finance ministers decide something "binding" on Greek debt.
"If parliament approves the measures and the eurogroup decides on something more specific and binding on debt sustainability, then, yes, I think the executive board of the ECB will bring the matter for discussion in the governing council," Stournaras told Politico website on Tuesday.
"There is plenty of time for Greece to benefit from QE," Stournaras said. "Greece needs to return to markets after the end of this program in 2018," the Bank of Greece governor said. (AFP)