Greek MPs back austerity measures in return for €86bn bailout

16 Jul 15

The Greek parliament yesterday approved a series of austerity measures to save the country from collapse and enable an €86bn three-year bailout package to go ahead. 

The vote was carried by 229 Greek MPs in favour of reforms, which include tax rises and an increase to the retirement age, while 64 voted against and six abstained. Half of the No votes came from the governing Syriza party.

The vote came after the International Monetary Fund warned the eurozone that Greece had taken on too much debt and would be unable to keep up its repayments after a new deal, adding that the country’s debt will peak at 200% of its output in the next two years.

But the Bill had to be approved in order for Greece to start negotiations with creditors for a third bailout package to help reduce its debt and recapitalise its banks.

Greek prime minister Alexis Tsipras got the reforms through with the help of pro-European opposition parties. He said the deal was a bad one, but the best possible he could get.

“I am fully assuming my responsibilities, for mistakes and for oversights, and for the responsibility of signing a text that I do not believe in, but that I am obliged to implement,” Tsipras said.

In order to start the three-year bailout, Greek MPs had to approve reforms including:

·         An increase in VAT on all goods and services including a top rate of 23% to take in processed food and restaurants, a 13% rate to cover fresh food, energy bills, water and hotel stays, and a 6% rate for medicines and books

·         Ending the VAT discount of 30% for Greek islands

·         A corporation tax rise from 26% to 29% for small companies

·         A tax rise on big cars, boats and swimming pools

·         Abolishing early retirement by 2022 and a retirement age increase to 67

 

  • Judith Ugwumadu
    Judith Ugwumadu

    Judith writes about public finance, public services and economics across Public Finance International and Public Finance. She previously undertook reporting stints at Financial Adviser, Global Security Finance and The Sunday Express.

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