Unions strike in protest at the latest round of welfare and wages cuts as the Athens government outlines a raft of austerity measures in its revised 2013 budget
Greek trade unions vowed on Wednesday to bring the country to a halt next week after agreeing a two-day general strike in protest at the latest round of welfare and wages cuts.
The strike call came after the Athens government outlined a raft of austerity measures in its revised 2013 budget that predicts a sixth year of contraction and an escalation in its debt to GDP ratio to 167%.
Prime minister Antonis Samaras said negotiations with the major lenders were concluded and it was now time for MPs to vote through the measures to secure €31bn (£24bn) of fresh loans.
The €13.5bn worth of cutbacks for 2013-14 include a two-year increase in the retirement age from the current average of 65, salary and pension cuts and another round of tax increases, including raising taxes for the interest on bank deposits from 10% to 15%.
The vast majority of the measures are to be taken in 2013 and include a €4.6bn cut in pensions and a €1.2bn cut from salaries.
Unions responded by announcing a 48-hour general strike that could persuade some coalition MPs to join opposition groups in rejecting a bill to be tabled by finance minister Yannis Stournaras next week.
However, there was confusion on Wednesday after some European finance ministers warned they still needed to address some outstanding budget issues before before releasing funds to the Greek government.
German finance minister Wolfgang Schäuble was pessimistic the chances of a quick decision on the payout of the bailout instalment.
"To secure the tranche being paid out, we need preconditions to be met that still have not been achieved," he said.
The strain in the governing coalition was evident earlier in a parliamentary vote on a bill to allow the government to privatise public utilities. The bill passed by majority, but 15 MPs from the Pasok party, which is a junior partner in the coalition, voted against certain articles. Dissenters included former prime minister George Papandreou, who voted against one article.
Stournaras submitted the revised budget to parliament on Wednesday. The deputy finance minister, however, canceled a scheduled presentation of the budget due to a 24-hour journalists' strike in protest at their industry healthcare plan being drawn into spending cuts of €455m.
The coalition is under pressure to pass the budget before the 11 November deadline set by Greece's international creditors. Officials are also concerned that Greece must find a way to re-finance more than €3bn of loans due for renewal on 16 November.
Ben May, an analyst at Capital Economics, said he was concerned that Greece's debts were already unsustainable and further austerity would make the situation unsustainable. He pointed out the International Monetary Fund's warning in its recent world economic outlook that the country's debts were more likely to reach 183% of GDP next year.
He said the expectation of a recovery from 2014 to bring the figure back to 120% by 2020 was an illusion.
"There is still a significant risk that Greece will not survive another year inside the eurozone."
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