July 17 (Bloomberg) -- Greek Prime Minister Antonis Samaras faces the first test of his revamped coalition today as he seeks parliamentary approval of austerity measures to unlock bailout funds.
Greek unions, which held the third general strike of the year yesterday, demonstrated again today in central Athens and will rally outside the parliament building this evening as a two-day debate on the bill approaches its climax. A roll-call vote will come around midnight, hours before the scheduled visit of German Finance Minister Wolfgang Schaeuble.
“We have to be realistic, the country has taken on specific targets to continue receiving financing,” Administration Reform and E-Governance Minister Kyriakos Mitsotakis said in the debate today. “This bill in the best way possible meets the need to achieve these targets.”
The bill includes provisions to push through a plan to put 25,000 public employees on notice for possible dismissal. Samaras’s government must pass the measures for the country’s euro-area and International Monetary Fund creditors to sign off on the next loan disbursements from Greece’s 240 billion-euro ($316 billion) bailout.
Hours before the vote, Samaras announced a cut in sales tax on restaurants and cafes to 13 percent from 23 percent from Aug. 1. The government remains bound by its fiscal targets and the cut will be reversed if there isn’t progress in the fight against tax evasion, he said.
Greek shares rose after Samaras’s announcement, with the Athens Stock Exchange index up 1.7 percent at 2:40 p.m. in Athens. The yield on government’s benchmark 10-year bond fell 2 basis points to 10.39 percent.
Samaras’s coalition was shaken last month after the departure of the Democratic Left Party following the closure of state broadcaster ERT. His New Democracy party must now rely on its historic rival, the socialist Pasok party. The two control 155 of the Greek parliament’s 300 seats.
“The vote is crucial and it will likely go through as there isn’t any alternative for Athens,” said Holger Schmieding, chief economist at Berenberg Bank in London. “Schaeuble’s visit is something very significant as it signals the strong German interest in having this Greek government succeed.”
Senior euro-area financial officials plan a conference call on July 24 to discuss the latest bailout payment, a European Union official said yesterday on condition of anonymity.
Euro area finance ministers committed to pay 2.5 billion euros this month and 500 million euros in October. In addition to the aid payment, Greece can count on recouping 2 billion euros of central bank profits on domestic bonds, plus 1.8 billion euros from the International Monetary Fund.