Greek Parliament Passes Further Austerity Measures To Unlock €4BN Bailout Loan

Greek Parliament Passes Further Austerity Measures To Unlock €4BN Bailout Loan

Tyler Durden’s pictureSubmitted by Tyler Durden on 05/08/2016
http://www.zerohedge.com/news/2016-05-08/greece-again-shut-down-protests-and-strikes-over-pensions

Update: Moments ago, in the latest European paradox, the two Greek political parties Syriza and Anel both of which were elected on an anti-austerity platform, voted through Greek parliament further austerity measures in the form of tax and pension reforms. The vote, which passed with 153 votes in support, is expected to unlock more international bailout money for the country, which has been unable to access a loan instalment of €5bn (£4bn).

Translation: after some pointless debate, Greece promised to do even more of what has not worked at all in the past 5 years just to access some more European “bailout” money, the bulk of which will promptly be used to repay (after some more posturing by the Eurogroup in the coming weeks) maturing debt, held by the ECB.

Before the vote, protesters in Athens threw petrol bombs at police, who responded with tear gas. On Monday, EU finance ministers will hold an extraordinary meeting aimed at averting a new crisis in the eurozone.

As BBC reported, the debate in Greece’s parliament lasted two days as MPs debated whether or not to install the unpopular pension and tax reforms. Thousands of people demonstrated, mostly peacefully, in Athens and in the country’s second-largest city, Thessaloniki. Labour unions called strikes in protest at the proposed measures, which include an overhaul of the pensions system and rises in social security contributions.
Prime Minister Alexis Tsipras of the leftist Syriza party secured enough votes to pass the measures.

Te International Monetary Fund and other European partners are demanding that Greece implement further austerity measures to generate nearly €4bn in additional savings – contingency money in case Greece misses future budget targets. Meanwhile, the IMF has been vocal about demanding a Greek debt haircuts if it is to participate in the third Greek bailout, leaving few options before Angela Merkel.

After today’s vote, Eurogroup ministers will assess “a comprehensive package of policy reforms as well as the sustainability of Greece’s public debt” at their Monday meeting in Brussels, a statement says.

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Earlier

Courtesy of MishTalk

Greece Shut Down By Protests And Strikes Over Pensions; Emergency Eurogroup Meeting Monday

In protest of still more pension cuts, Greek unions started a 3-day strike on Friday that has shut down much of the country.

The Greek parliament holds a pension reform vote on Monday. The vote is expected to pass but perhaps barely. Syriza has a slim three seat majority in the 300-seat Greek parliament.

Also on Monday, the Eurogroup called an “extraordinary” meeting in Athens to discuss the state of play of the macroeconomic adjustment program for Greece.

“Extraordinary” is a euphemism for “emergency”. More demands on Greece are coming up. Greece is way off projected (and mandated) budget surplus targets.

 

Greek Protesters

Greek protests

Protesters have gathered outside parliament in Greece ahead of a vote on further austerity measures in return for more international bailout money. The rally coincides with a three-day general strike against the introduction of tax and pension changes.

The BBC reports Greece Protests Ahead of Vote on Pension and Tax Change.

Once again protesters have gathered in Syntagma Square, just outside Greece’s parliament, as lawmakers debate tax and pensions reforms inside the building. Thousands marched in Athens on Saturday – but Sunday’s rally is expected to be even bigger.

 

The changes expected to be approved by MPs include tax hikes and pension cuts. Greece has been unable to unlock the next loan installment of €5bn (£4bn) after clashing with its creditors over the need for more reforms.

 

The nationwide strikes are the fourth series to be called since Prime Minister Alexis Tsipras’s government won re-election after organising a referendum on the country’s bailout.

 

Greece is already looking to implement spending cuts that will amount to 3% of the country’s gross domestic product or €5.4bn euros by 2018.

Third Bailout

Third Greek Bailout

Emergency Meeting

An Extraordinary Eurogroup Meeting has been called for May 9, conveniently timed to coincide with a Greek vote on pension reform.

Discussions will cover a comprehensive package of policy reforms as well as the sustainability of Greece’s public debt. Both elements need to be in place in order to finalise the programme’s first review and unlock further financial assistance to Greece.

Agreed Primary Surplus Path

  • -0.25% in 2015
  • +0.50% in 2016
  • +1.75% in 2017
  • +3.50% in 2018

Fairy Tale Math

Achievability of that path is such an amazing fairy that even the IMF recognizes the problem.

On May 6, I noted Showdown! In Leaked Letter IMF Tells Germany “Debt Relief for Greece or IMF Drops Out”.

Christine Lagarde’s letter was conveniently leaked to coincide with the convenient timing of the emergency meeting which in turn was conveniently timed for the same day of the pension vote.

Church Lady2

In the letter, Lagarde stated “Third, going forward, we do not expect Greece to be able to sustain a primary surplus of 3.5 per cent of GDP for decades to come.

Instead of conducting an emergency meeting, I suggest a meeting with the church lady.

Lagarde now proposes a primary surplus of 1.5%.

That is nearly as unlikely as a surplus of 3.5%. And at a rate of 1.5%, it will take decades longer for Greece to pay back the hundreds of billions of euros it owes in these programs.

Outright debt reductions or default is coming up. But don’t expect the eurogroup to come to that conclusion. Instead it will demand still more budget cuts as soon as the next set passes.

It’s the Debt, Stupid!

The budget cuts and reform are surely needed. The problem is over €300 billion in debt that Greece cannot possibly pay back.

Of the first two bailouts of €215.9 billion in Greek aid, only €9.7 billion went to Greece. The rest went to banks and other creditors.

For details, please see It’s the Debt, Stupid!

The third “bailout” adds another €86 billion plus bridge loans to the mix.

Default still looms and the totals keep ratcheting up.

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Some images from today’s protest:

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