Greek ministers urge backing for austerity plan

Monday, 27 June 2011 00:00 - - {{hitsCtrl.values.hits}}

ATHENS (Reuters):Greek ministers and policy makers urged parliament on Saturday to do its duty next week and pass a deeply unpopular set of austerity measures international lenders have demanded as the price for staving off bankruptcy.

With Greece teetering on the edge of defaulting on its huge public debt, Finance Minister Evangelos Venizelos offered to talk to wavering deputies from the ruling Socialist Party, at least two of whom have said they will oppose the measures in crucial votes on Wednesday and Thursday.

“I believe that the sense of responsibility will ultimately prevail, the God of Greece is great,” he told TV station Alter.

Without parliamentary approval for the measures, the European Union (EU) and International Monetary Fund (IMF) have said they will not release a vital 12 billion euro ($17.2 billion) loan tranche and the government would run out of cash within days.

On Friday, Prime Minister George Papandreou’s already slim majority was further undermined when a deputy from his PASOK party said he would vote against the measures, joining another party rebel who announced his opposition earlier this month.

Papandreou’s government has 155 seats in the 300-strong parliament, having seen five defections since it came to power in October 2009 with 160 deputies.

With the economy stuck in its deepest recession since 1974 and youth unemployment running at over 40 percent, the mix of spending cuts, state sell offs and tax hikes demanded by the EU and the IMF has caused bitter resentment among ordinary Greeks.

A two-day general strike is planned next week to coincide with the votes, following a series of protests and rolling strikes at companies including Greece’s main electricity group PPC, which is slated for privatisation next year.

Athens accepted a package of 110 billion euros of EU/IMF loans in May 2010 but now needs a second bailout of a similar size to meet its financial obligations until the end of 2014, when it hopes to return to capital markets for funding.

In a statement, Venizelos acknowledged the austerity plan was harsh and imperfect and relied too heavily on tax increases but he said it would give the government time to negotiate a new deal with the EU which could include extra stimulus measures.

“The 12 billion euros of the fifth tranche are absolutely necessary to meet the states’ cash needs, which is nothing other than the immediate and vital needs of citizens,” he said.

On Saturday, government ministers and policymakers including Bank of Greece governor George Provopoulos gave a series of media interviews to hammer home the message that the measures must pass to give the government some breathing space.