EUROZONE-GREECE/BUDGET Greece's Tsipras pleads for debt relief with austere budget

Record ID: 136194

  • Title: EUROZONE-GREECE/BUDGET Greece's Tsipras pleads for debt relief with austere budget
  • Date: 6th October 2015
  • Summary: ATHENS, GREECE (OCTOBER 5, 2015) (REUTERS) VARIOUS OF EXTERIOR OF GREEK PARLIAMENT
  • Embargoed: 21st October 2015 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: General
  • Reuters ID: LVA3LYD00F7QNZ32J0MXW5SY5VBL
  • Aspect Ratio: 16:9
  • Story Text: Greek Prime Minister Alexis Tsipras issued a resounding call for debt relief on Monday (October 5) as his government unveiled an austere 2016 budget sticking strictly to international bailout targets in a new spirit of cooperation with European and International Monetary Fund creditors.
    The draft budget, released as Tsipras delivered his keynote four-year policy programme to parliament, projected that the economy would stay in recession next year, shrinking by 1.3 percent after a 2.3 percent contraction in 2015, before returning to growth in the second half of 2016.
    "The first six months of 2016 will be when the economy will return to growth," Tsipras told lawmakers.
    Tsipras, whose leftist government was re-elected on September 20 after performing a U-turn and accepting a bailout of up to 86 billion euros ($96.1 billion) in return for spending cuts, tax rises and economic reforms under strict external supervision, told lawmakers he would bargain hard for debt relief.
    "We will propose an extension of (loan) maturities, a reduction of interest rates and a conversion to stable interest rates. We will also propose a growth clause (linking the amount of debt service to GDP growth) and an extended grace period (on debt service payments) to create enough fiscal space to support investment activity and the restructuring of our welfare state," said Tsipras.
    The budget contained a total 6.4 billion euros of austerity measures this year and next, of which 4.34 billion will fall in 2016.
    Eurozone finance ministers have agreed to discuss a limited debt restructuring, but not writedowns, if Greece successfully concludes a first review of the new bailout programme by the end of this year, which entails passing far-reaching reforms of taxation, pensions and public administration.
    Tsipras said the government would pass all the required laws to achieve a successful bailout review and open the door for debt renegotiations, which were crucial for economic recovery.
    The prime minister said the government aimed to restore capital market access within 20 months by the first half of 2017 and he expected economic growth to return by mid-next year. Economists say both goals seem optimistic if not impossible.
    "The implementation of the bailout is necessary but it is not enough on its own. We need a web of parallel actions and we are looking at a timeframe towards the first six months of 2017, the next 20 crucial months, to achieve our target of restoring liquidity and regaining market access," said Tsipras.
    Although government officials are optimistic that this year's recession will be milder than projected in the bailout programme, due to an increase in tourism revenues and stronger than expected first-half data, any change in economic forecasts will only come when the final budget is adopted in December.
    Government debt is seen rising to 197.7 percent of gross domestic product in 2016, including the new loans.
    Opposition lawmakers slammed the austerity-packed programme.
    "The budget draft that was submitted brings us back to reality which is that there will be pension cuts, there will be a storm of new taxes, there will be recession and there will be a deficit instead of a surplus both in 2015 and in 2016," said main opposition New Democracy party leader, Vangelis Meimarakis.
    Potami party lawmaker, Haris Theocharis said the plan wasn't bringing anything new to the table.
    "Well, it seems that this programme is quite vacuous, we haven't heard anything that's new or that's original, really the same kind of repetitive wishful lists about what the prime minister would like to do. But as we saw seven months of no implementation of anything I think this will be continued another seven months or whatever period of really no progress on any of the real fronts."
    Union of Centrists party leader Vassilis Leventis echoed those thoughts.
    "He (referring to Tsipras) said the same things that Samaras and Karamanlis (referring to former prime ministers) were saying to a people that are hungry and those in power cannot understand it."
    However, Tsirpras' health minister defended the plan.
    "I believe the government programme is mature and realistic. It is a programme that allows the Greek people and the government to face their responsibilities with optimism and hope," said health minister Markos Bolaris.
    Tsipras' policy statement was largely devoid of the swagger with which he vowed in January to roll back austerity and cast off dependence on bailout aid.
    The more pragmatic re-elected leader, who trounced hard left rebels in last month's vote, controls 155 lawmakers in the 300-seat parliament and is sure of a confidence vote on Wednesday.
    However, some leftists in his Syriza party remain reluctant to accept liberal market reforms of labour law, cuts in welfare and retirement benefits and sweeping privatisation of state assets, setting up tense votes next year.
    With that in mind, Tsipras promised to find ways to ease the social pain that the bailout will entail for the poorest Greeks and vowed to negotiate better terms or find alternative measures for some of the unpopular policies sought by creditors.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2015. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register