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Samaras Wins Approval of Greek 2013 Budget to Secure Aid

Greek Prime Minister Antonis Samaras
The report gave a mixed assessment of Greece’s progress from debt to recovery, saluting Prime Minister Antonis Samaras’s coalition for “a significant catching-up” while saying that “risks to the program remain very large.” Photographer: Louisa Gouliamaki/AFP/Getty Images

Greek Prime Minister Antonis Samaras garnered the support of enough lawmakers from his three-party coalition to secure approval for the 2013 budget, a plan that aims to unlock bailout funds and avert a financial collapse that could drive the country from the euro.

A total of 167 lawmakers in the 300-strong chamber backed the budget, with 128 voting against and four saying only that they were “present,” parliament speaker Evangelos Meimarakis said in comments broadcast live on Vouli TV.

“We’ve taken the second decisive step with even greater unity,” Samaras said. “What we’ll see from now on is recovery and growth.”

The 2013 fiscal plan, which forecasts a deficit of 5.2 percent of gross domestic product and a sixth year of contraction, is designed to regain the confidence of its euro-area and International Monetary Fund creditors. Euro-area finance ministers are due today to meet to discuss Greek developments as Samaras presses European Union leaders to release a 31.5 billion-euro ($40 billion) bailout tranche.

The vote was the second in five days after lawmakers approved an austerity bill on Nov. 8 containing economic reforms and 13.5 billion euros of austerity measures demanded by Greece’s creditors.

The budget sees Greece’s economy shrinking 4.5 percent next year after contracting 3.8 percent this year. General government debt will reach 189 percent of GDP next year, or 346.2 billion euros, from 176 percent this year, according to the document.

Peaceful Assembly

At least 15,000 people gathered peacefully outside parliament before the budget vote to demonstrate opposition to the second round of austerity measures this year.

Democratic Left, a coalition partner, voted in favor of the budget after refusing to support the austerity bill because it contained changes to labor laws it says have no fiscal benefit.

Delays in approving Greece’s next tranche, which has been frozen since June, reflect tensions within the Greek coalition and between Greece and the “troika” representing creditors. Donor countries such as Germany also need national parliamentary endorsement before giving the green light for the next payments from a total of 240 billion euros pledged to Greece since 2010.

Debt Sustainability

“Greece will avoid a default this time around, but the critical issue of debt sustainability will stay with us for at least another year,” Erik Nielsen, chief economist at Unicredit Bank AG, said in a note. “There is no doubt that the present situation is uncomfortable for everybody.”

Samaras has pressed for two extra years, until 2016, for Greece to meet deficit-reduction targets imposed by the troika. Creditors’ calculations are assuming a two-year extension, a European official said on Nov. 9, while declining to say whether it will be approved.

A variety of options are under consideration for plugging the financing hole that an extension would open up, the official said. While engineering a buyback of Greek debt at depressed prices is one of them, it is “technically and financially infinitely more complicated than you would ever imagine,” the official said.

Solutions hinge on when Greece’s debt will become “sustainable,” previously defined as dropping to 120 percent of gross domestic product by 2020. The official said a decade is now the rough timetable, implying that the sustainability target may be pushed out to 2022 or 2023.

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