Greece’s parliament passed a budget of continued austerity, as mandated by the country’s creditors, but which forecasts robust growth for next year.
Greek Prime Minister Alexis Tsipras said it would mark Greece’s “final exit” from its nearly decade-long financial crisis.
The budget adds more than 1 billion euros (US$1.056 billion) in new taxes, mostly indirect taxes on items from phone calls to alcohol. It also cuts spending by more than 1 billion euros.
The budget was backed by the left-dominated ruling coalition and opposed by all other parties. It passed by a vote of 152 to 146 on Saturday.
Despite the continued austerity, Tsipras said that next year would be a “landmark year” with 2.7 percent economic growth.
He underlined that his government achieved a primary surplus this year — excluding debt servicing — more than double the original forecast and defended his decision to give a total of 617 million euros this Christmas to some 1.6 million low-income pensioners, replacing a holiday bonus scrapped by Greece’s bailout creditors.
Tsipras also said that an assessment of Greece’s third bailout program would be completed soon, without additional austerity measures.
However, there are those who believe that the budget’s growth estimate is exaggerated.
The Greek Budget Office has said that the combination of extra taxes and spending cuts will “in the short term” have “a recessionary effect.”
In addition Greek Minister of Finance Euclid Tsakalotos confirmed to parliament that the IMF demands additional measures, including wage and pension cuts, worth 4.5 billion euros starting in 2019, as well as public sector layoffs.
Greek opposition leader Kyriakos Mitsotakis said Tsipras’ handout to the pensioners was a desperate move and that the prime minister was preparing a so-called “heroic exit” through early elections that he is bound to lose.
Tsipras said that electons would take place as scheduled, in 2019.
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