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Financial News: Greece Parliament Okays Reforms Package To Secure Bailout

Greece Parliament Okays Reforms Package To Secure Bailout Funds

05/19/2017 - 04:11:00 (RTTNews)

(RTTNews) - Greece's lawmakers approved a reforms package on Thursday that includes pension cuts and tax hikes as demanded by the country's lenders in return for unlocking another tranche of bailout funds and to start discussions over debt relief.

The parliament nod came ahead of the Eurogroup meeting on May 22 when euro area finance ministers would consider disbursement of the bailout funds and discuss debt relief.

At the start of the month, Greece had reached a deal with its international creditors on reforms, thus paving the way for the disbursement of the next tranche of funds from the EUR 86 billion bailout agreed in 2015 and the start of talks on a possible debt relief.

It were these reforms that lawmakers approved on Thursday even as demonstrators, mainly public-sector trade unions, staged protests outside the parliament and hurled firebombs at police who responded with tear gas.

New austerity measures were passed with support from all 153 MPs of the leftist Syriza party and its coalition partner, Independent Greeks or ANEL.

Prime Minister Alexis Tsipras told the parliament that he hoped to see his country's exit from bailout programmes in 2018.

Opposition party New Democracy's leader Kyriakos Mitsotakis alleged that the omnibus reform package was the biggest political fraud the country has ever known.

Under the deal, Athens has agreed to carry out pension cuts in 2019 and raise taxes, and privatize its energy market, among a host of other reforms.

The government hopes that the passage of the unpopular package would pave the way to release the next bailout tranche totaling more than EUR 7 billion.

Discussion over providing more bailout funds had stalled after a review mission to Athens returned in December without reaching a deal. The country is in dire need of bailout cash to meet debt repayment of more than EUR 7 billion due in July, or risk default.

The International Monetary Fund has also stayed away from the latest bailout as it seeks assurance regarding the sustainability of the country's massive debt pile.

Greece's economy contracted for the second straight quarter at the start of the year, shrinking 0.1 percent from the previous three months. However, the pace of contraction was sharply slower than the 1.2 percent witnessed in the final quarter of 2016.

At the start of the week, the Greek government lowered its GDP growth target for this year to 1.8 percent from 2.7 percent.

Last week, the European Commission trimmed Greece's growth forecast for this year and next to 2.1 percent and 2.5 percent, respectively. The reasons for the downgrade was the poor economic performance witnessed in the fourth quarter of 2016 and a delayed return of investor and consumer confidence.

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