Greece approves austerity budget

Greek MPs approved the country’s 2013 austerity budget in a vital step to persuade international creditors to unblock a vital rescue loan instalment without which the country will go bankrupt.

The budget passed by a 167-128 vote in the 300-member parliament last night. It came days after a separate bill of deep spending cuts and tax increases for the next two years squeaked through with a narrow majority following severe disagreements among the three parties in the governing coalition.

Prime minister Antonis Samaras pledged that the spending cuts would be the last Greeks had to endure.

“Just four days ago, we voted the most sweeping reforms ever in Greece,” he said. “The sacrifices (in the earlier bill and the budget) will be the last. Provided, of course, we implement all we have legislated.

“Greece has done what it was asked to do and now is the time for the creditors to make good on their commitments.”

Athens says the passage of the two bills, the next loan instalment, worth 31.5 billion euros (£25.2bn), should be disbursed. Without it the government has said it will run out of cash on Friday, when five billion euros (£4bn) worth of treasury bills mature.

Finance ministers from the 17-nation eurozone are meeting in Brussels today, with Greece high on the agenda. But German finance minister Wolfgang Schaeuble has indicated it is unlikely that the ministers will decide on the disbursement there and then.

“We all … want to help Greece, but we won’t be put under pressure,” Mr Schaeuble told the weekly newspaper Welt am Sonntag.

He said the so-called troika of debt inspectors would probably not deliver their report on Greece’s reform programme by today. The creditors also want to see what the debt inspectors have to say about Greece’s debt sustainability.

But speaking minutes before the vote, Mr Samaras pledged the bailout funds would be disbursed “on time”.

Finance minister Yannis Stournaras also stressed the precariousness of Greece’s cash reserves, with the treasury bills due on Friday.

“Without the help of the European Central Bank, the refunding of these treasury bills from the banking system will lead the private sector to complete suffocation,” he said.

Disbursement of the next instalment was essential “because the state’s available funds are marginal, although better than expected because the 2012 budget is being executed better than expected”, he said, adding that the funds were needed to pay salaries and pensions, as well as for the import of medicines, fuel and food.

Hours before the vote, 15,000 people converged outside the Athens parliament in a peaceful demonstration. The crowd was far smaller than the 80,000-strong gathering which protested against last Wednesday’s austerity bill vote. That demonstration degenerated into violent clashes between riot police and hundreds of protesters.

Greece is mired in a deep recession heading into its sixth year, with more than a quarter of Greeks unemployed. Battered by a mountain of debt and a gaping budget deficit, Greece has been relying on international bailout loans from other eurozone countries and the International Monetary Fund since May 2010.

Alexis Tsipras, the head of the main opposition Radical Left Coalition party, or Syriza, insisted the new austerity cuts were unfair and would leave Greeks unable to buy essentials such as food, fuel and medicine this winter.

“This is why we say you are dangerous for this country,” Mr Tspiras said, addressing the government. “You are incapable of negotiating.”

Mr Tspiras promised to repeal the austerity laws and negotiate “on an equal footing” with the country’s creditors if he were to come to power.

In an opinion poll published in the Sunday newspaper To Vima, 66% opposed the new austerity measures, but 52% said the government, which emerged from June elections, should be given more time to handle the economic crisis.

The poll showed Syriza, which placed second in the June elections, ahead of the coalition leader, the centre-right New Democracy party, by nearly three percentage points. The extreme right-wing nationalist Golden Dawn party continued its strong showing with more than 10% of respondents preferring it.

The poll, which involved 1,017 respondents, had a margin of error of 3.07 percentage points.