The Greek parliament yesterday approved a budget for next year that imposes yet more austerity on the debt-choked nation, hours after thousands took to the streets shouting: “We can’t take it any more.”
The bill targets a budget deficit of 7.4 percent of GDP next year, down from about 9.4 percent this year, through more spending cuts and tax increases, in order to put Greece in line with terms of the bailout that saved it from bankruptcy in May.
“We will do whatever it takes to succeed,” Greek Prime Minister George Papandreou told lawmakers just before they started to vote. “We will change this country.”
The budget was approved on a strict party-line vote by the 156 ruling Socialist party lawmakers in the 300-strong parliament.
Public transport ground to a halt in Athens on Wednesday as about 3,000 protesters rallied peacefully in front of parliament to protest wage cuts in the public sector and other steps meant to help stem a crisis that has shaken the eurozone, spread to Ireland and threatens others like Portugal.
“We have no hope, we are just drowning,” said Apostolos Kostopoulos, 46, a Public Power Corp technician whose salary was cut.
“Parliament is voting today on a budget that will plunge people deeper into poverty,” he said as others waved a large Greek flag covered with “For Sale” tags.
Another 2,000 people joined a separate anti-austerity march, but overall turnout was much smaller than in previous protests. Some Greeks questioned the point of countless strikes that have failed to divert the government from its austerity path.
“We don’t agree with austerity, but nothing is going to change. The government will not change policies just because we take to the streets,” said Susanna Apostolaki, 43, a secretary.
The new spending cuts and tax rises in next year’s budget build on an estimated 6 percentage points reduction of deficit this year.
However, Greece is still set to miss its fiscal targets for this year and the new measures have failed to calm fears about its ability to pull itself out of its crisis. Fitch agency said late on Tuesday it may cut the country’s credit rating next month to junk.
The leader of the main opposition party, the conservative New Democracy, told parliament that the budget for next year and the EU/IMF bailout would fail.
“PASOK [the socialist party] is lying when it says that the [EU/IMF] memorandum will take the Greek economy out of the crisis. It will deepen the crisis,” Antonis Samaras said. “The government’s policy is reducing GDP more than it reduces the deficit.”
Athens bus and subway drivers have been holding on and off strikes for two weeks and did not work at all on Wednesday, keeping Christmas shoppers from the city center and adding to the strain of recession-hit retailers.
The socialists, who revealed a gaping budget deficit after coming to power last year, have braved public discontent and taken draconian measures to meet the EU/IMF rescue terms.
This year already, the government has cut public sector wages by about 15 percent, increased the retirement age, frozen pensions and cut public spending. However, it has failed to boost tax collection as much as targeted, despite a hefty VAT increase.
Greece’s lenders say it is broadly on track with fiscal consolidation plans. However, partly as a result of the measures, the economy is forecast to shrink 3 percent next year after a 4.2 percent drop this year, with unemployment jumping to a record 14.6 percent from an estimated 12.1 percent this year.