Greece passes new austerity budget

 

Updated December 07, 2011 14:42:05

Photo: Greek prime minister Lucas Papademos says the budget is a first step in reversing disastrous fiscal policies. (AFP: Aris Messinis )

Greek politicians have approved a 2012 budget pledging tough fiscal goals demanded by European Union partners in return for fresh loans.

The budget was passed as clashes broke out between protesters and police outside parliament.

A broad majority of the parties backing Lucas Papademos' caretaker administration secured the economic blueprint's passage by 258 votes to 41, the assembly said, after the vote concluded after midnight on Tuesday (local time).

Mr Papademos had earlier described the budget as a key first step in a process to reverse disastrous fiscal policies that have burdened each Greek with over 30,000 euros ($40,000) in state debt.

"Our actions will determine the country's economic future, not only for 2012 but for the entire decade," said Mr Papademos, who took over as prime minister last month with the task of ratifying a key eurozone debt deal and holding early elections.

Mr Papademos, a former European Central Bank deputy chief, also insisted Greece's position in the European Union and the euro was "non-negotiable".

"Our place in Europe is non-negotiable. The Greek people will defend it in every way possible," Mr Papademos said.

"Europe and our common currency remain, despite the crisis, one of the noblest achievements of recent history," he said.

Budget protests

The violence outside parliament broke out as thousands of pupils, students and leftist supporters staged separate demonstrations in memory of a schoolboy whose fatal shooting by police three years ago sparked nationwide riots.

Protesters wearing gas masks and goggles threw firebombs and marble shards broken off from nearby buildings at police, who responded with tear gas and stun grenades to push them back, reporters said.

Nearly 20 people, including over a dozen officers, were injured during an earlier bout of midday clashes and police said they had made 11 arrests.

Police held another 10 people in Thessaloniki after smaller-scale incidents.

Gatherings were also held in Volos, Hania and other Greek cities.

The government had warned during the budget debate that the stakes could not be higher for the country amid a debt crisis which has upended the economy and threatened the eurozone despite the best efforts of the EU, IMF and Athens to stabilise its finances.

The key issue for Greece is implementation after it missed deficit and debt targets laid down in a first EU and IMF rescue in May 2010 and was then forced to seek more help as the economy slumped.

A second accord agreed in late October requires Greece to adopt even tougher austerity measures in return for new funding of 100 billion euros and a controversial debt write-down deal with creditor banks worth 100 billion euros.

The accord also makes available 30 billion euros to help local banks cover the losses on their holdings of Greek government bonds caused by the 50 per cent bond write-down.

The budget puts the public deficit at 5.4 per cent of gross domestic product (GDP) in 2012, down from 9.0 per cent this year, compared with the EU ceiling of 3.0 per cent and the previous forecast for next year of 6.8 per cent.

AFP

Greece passes new austerity budget - ABC News (Australian Broadcasting Corporation)