Greece chews over savage cuts

Greece’s parliament on Monday began a three-day debate on brutal austerity measures after €600m ($856m) of additional last-minute savings were agreed with international lenders.

Evangelos Venizelos, finance minister, told deputies that €300m of additional revenues would be raised from new taxes, with the remainder coming from spending cuts, but he gave no details.

Negotiations on the package had continued over the weekend after experts from the European Union, International Monetary Fund and European Central Bank identified yet another hole in this year’s budget, caused this time by unexpectedly high tax rebates.

Monday’s revision, the third since Greece’s finance ministry started negotiations on the four-year package in early May, reflects continued spending overruns and revenue shortfalls this year as socialist government officials – from cabinet ministers to tax collectors – withheld support for the reform effort.

Four socialist deputies have threatened to vote against the €28bn austerity package agreed with Greece’s international lenders in return for a second bail-out loan, increasing tensions in the governing Panhellenic Socialist Movement, or Pasok, as the debate got underway.

“This package is not a panacea, but it contains reforms that we socialists should have carried out years ago without pressure from our creditors,” said Efstathios Koutmerides, a socialist deputy launching the debate.

He added: “People are now angry, bitter and frightened. They are asking whether this new package will work.”

Mr Venizelos, who also serves as deputy prime minister, urged dissident deputies to back the package in a roll-call vote on Wednesday to prevent the country from defaulting on its sovereign debt.

A separate vote is due on Thursday to approve enabling legislation to accelerate the reforms and establish a stand-alone privatisation agency to handle more than 20 disposals by the end of the year.

Three dissident socialist deputies argue that the medium-term austerity package contains excessively harsh measures.

A fourth said he would vote against the planned sale of a strategic stake in the Public Power Corporation, the state electricity utility, included in a €50bn privatisation programme.

With 155 seats in the 300-member parliament, Pasok could still push through the measures by a narrow majority after the defections, although the government’s credibility would suffer a heavy blow.

The main conservative opposition New Democracy party has rejected appeals for consensus by Greece’s European partners, but several deputies from conservative and rightwing splinter groups have said they are willing to back the package.

Public sector trade unions have called a 48-hour general strike starting today to protest against austerity measures, including the cutting of 150,000 jobs.

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