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Greece to approve new cuts for 2017 in parliament vote

Public spending on salaries and pensions will also be cut by 5.7 billion euros next year

Published: 10th December 2016 08:09 PM  |   Last Updated: 10th December 2016 08:09 PM   |  A+A-

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In this AP file photo, pensioners in Greece take part in an anti-austerity rally.

By AFP

ATHENS: Greek lawmakers were to approve Saturday a new round of pay cuts and tax hikes for 2017 demanded by international creditors, with Athens hoping for an ECB stimulus next year.

The vote in parliament, expected after midnight, will levy around one billion euros ($1.07 billion) in extra taxes on cars, fixed telephone service, pay TV, fuel, tobacco, coffee, beer and other items.

Public spending on salaries and pensions will also be cut by 5.7 billion euros next year.

Thousands of Greeks took part in union demonstrations and a general strike this week against the new cuts, but the leftist government majority is expected to approve the budget despite the misgivings of many of its lawmakers.

Prime Minister Alexis Tsipras needs to stay on good terms with EU-IMF creditors to conclude an ongoing reforms audit early next year.

Greece hopes that a deal will persuade the European Central Bank (ECB) to include Greek sovereign debt in its asset purchase programme, known as quantitative easing, or QE. 

Without access to QE, the country will not be able to make a planned return to debt markets by early 2018, according to the Greek finance ministry.

Last week, eurozone lenders approved short-term relief measures to help Greece manage repayment on its huge public debt, which will reach 315 billion euros this year, according to the latest EU data.

But Germany, facing public bailout fatigue and federal elections next year, has led a hardline stance among eurozone lenders to force Greece to adopt austerity reforms well beyond the end of its present bailout 2018.

Hardline EU states also want Greece to run a primary surplus, after debt servicing, of 3.5 percent of gross domestic product (GDP), beyond 2018.

Athens has flatly refused to consider further austerity measures beyond 2018.

Tsipras on Thursday made a surprise move, announcing a one-off payout to 1.6 million low-tier pensioners, and a sales tax break for islands sheltering thousands of migrants.

The European Commission said it was "not made aware of all the details of the announcement before they were made" and would need to study the 617-million-euro package "before commenting any further or acting further."

Tsipras' critics at home immediately denounced an electoral ploy, but the government insisted this was not the case.

"Europe owes a debt to (these islanders), the Greek state owes them its support," Tsipras said in his announcement, with officials noting that the money would come out of 1.0 billion euros of tax surplus raised in 2016.

Finance Minister Euclid Tsakalotos on Saturday said Greece could manage a primary surplus of 2.5 percent, and dedicate a further 1.0 percent to tax breaks for small and medium businesses.

Tsakalotos on Saturday also praised Eurogroup chief Jeroen Dijsselbloem, a frequent critic of the Tsipras administration, as a man of principle.

"He may be harsh some times, but he keeps his word," the minister told financial newspaper Agora.

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