Greece is spared …for now
THE Greek parliament bought time yesterday, voting to swallow the bitter pill of austerity once again in return for a vital €12bn (£10.8bn) instalment of aid that will stave off national bankruptcy for a few more months.
The 300 deputies must vote again today for laws to implement the €28bn in cuts they passed yesterday.
In the vote, which saw the budget pass by 155 to 138, one opposition conservative voted in favour, one member of the governing Socialist party was expelled for voting against the cuts and five deputies abstained, leaving markets confident today’s bills will pass.
But even if they become law, few believe that the government is capable of implementing the programme, which involves €2bn in tax rises and €1.19bn in benefits cuts this year, as well as €50bn of privatisations and savings of €3bn from a crackdown on tax evasion over four years.
The measures will face stiff opposition: as deputies voted, violent protestors attempted to storm parliament and hurled petrol bombs at police. Clouds of teargas and smoke filled Athens’ Syntagma Square, forcing the peaceful demonstrators to beat a hasty retreat.
Markets rose despite the chaos on the ground, with yields on two-year Greek debt dropping a whole percentage point. But economists warned that the reprieve would be short-lived. Saxo Bank’s Nick Beecroft said: “These relief rallies are becoming shallower and shorter. Pretty soon they will come back down to earth and ask, ‘What’s the next stumbling block?’”
If deputies pass today’s round of bills, Greece will qualify to receive a fifth tranche of the €110bn bailout it was promised last year. But its debt-to-GDP ratio is still on course to hit 160 per cent and the EU is scrambling to find another €100bn for a second rescue.
Meanwhile, the chair of the European Banking Authority (EBA), Andrea Enria, has revealed that the EBA had to force banks to re-submit data for the EU’s stress tests earlier this month because they were not sufficiently gloomy about potential losses from the sovereign debt on their books.