MPs pass austerity budget - The Best from Greece

The government passed the 2012 budget, which is aimed at shrinking the state’s debt mountain through tax hikes and spending cuts, hours after protesters clashed with police outside parliament.

 

Three major parties backing Prime Minister Lucas Papademos voted solidly for the budget plan, in a vote that took place in the early hours of Wednesday morning.

 

"Successful implementation of this budget will restore the country's international credibility and create the conditions to rescue the economy," Papademos told MPs who approved the plan with an overwhelming majority of 258 out of 300 seats.

 

"We can't afford to keep whining ... the targets are ambitious but feasible," he added.

 

But New Democracy leader Antonis Samaras made clear his support was solely aimed at rescuing the country from immediate default and vowed to soften tax steps and boost growth measures if he wins power in elections expected in February.

 

"Our disagreements remain ... we are approving the budget because it is an absolute priority to safeguard the viability of Greek debt," said Samaras, whose party is leading in the opinion polls but without an absolute majority.

 

Samaras made clear he will insist on snap elections in February, after the government clinches a bond swap deal to cut the national debt.

 

The government will continue talks with private bondholders on the specific terms of the deal next week in Athens, Finance Minister Evangelos Venizelos told MPs.

 

"Things are not simple and things are not easy. I call on all parties of the coalition to support the prime minister and myself ... during difficult decisions and the even more difficult and delicate handling of the PSI [public sector involvement]," Venizelos said.

 

The economy is expected to shrink by more than 5.5 percent in 2011, its fourth straight year of recession, and the government expects GDP to shrink further next year, by 2.8 percent.

 

The budget is designed to cut the deficit to 5.4 percent of GDP from a projected 9 percent this year, and generate a surplus before interest payments - a key step to lower the state’s debt.

 

The last time the country managed a primary budget surplus was in 2002, just after it joined the eurozone in January 2001.

 

 

Most citizens expect their economic situation to worsen next year but they want to stay in the eurozone, polls show.

 

"We must solve these problems which undermine social cohesion and hurt hundreds of thousands of young people," Labour Minister Yiorgos Koutroumanis told MPs.

 

"There are no magic solutions. But in 2012 we must try to bring back growth and investments that will create more jobs." (Reuters/Athens News)