Greece approves reform bill on eve of Monday’s Eurogroup

7 November 2015
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The Greek parliament has approved reforms needed to unlock €2 billion of bailout aid but several measures still have to be agreed with creditors ahead of Monday’s meeting of eurozone finance ministers.

The bill passed early on Friday by 153 votes to 118 as cross-party support weakened for implementing further tough measures aimed at pulling Greece out of recession by 2017.

A clause increasing taxes on microbreweries but not the Greek operations of international beermakers was dropped after Syriza’s coalition partner, the nationalist Independent Greeks, threatened to bring down the government by voting against the bill.

Pro-European opposition deputies who backed an earlier reform package claimed the leftwing Syriza government was trying to evade or dilute measures already agreed in return for a third bailout of up to €86 billion.

If the eurogroup approves the €2 billion disbursement, the funds will be allocated to meeting overdue payments owed to hundreds of government suppliers.

Friday’s vote covered so-called “prior actions” required by lenders that had been left out of legislation passed last month.

These include changes in calculating pension payments, improved compliance with EU energy regulations and reductions in tax breaks for farmers.

But Athens is still at odds with lenders over reforms that are particularly unpopular with middle-class voters.

The finance ministry is seeking a compromise on foreclosures on first homes that would affect thousands of mortgage holders after its first proposal was rejected as too generous by bailout monitors.

Tryphon Alexiades, deputy minister for revenues, told parliament he would find another source of funding by the weekend following strong reaction to the government’s plan to impose a 23 per cent VAT rate on private schools.

It was unclear whether bailout monitors would accept an alternative scheme for raising €300 million to plug the gap in next year’s budget by taxing betting games because of doubts over revenue projections.

Even if legislators approve the additional measures at an emergency parliamentary session at the weekend, there are more hurdles ahead for the government.

Further cuts in pensions and tax rises for farmers are among the next package of reforms that must be adopted by the end of this month before the Syriza government can pursue talks on debt relief, its policy priority for 2016.

Source: FT

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