ATHENS (Reuters) - Parliament in Athens prepared to vote an annual budget on Sunday that will cut spending and raise taxes yet again but which the government insisted will kill off talk of Greece being forced out of Europe’s currency union.
An anti-austerity demonstration called by major trade unions mustered thousands of protesters outside during the debate but a spokesman for conservative prime minister Antonis Samaras’s coalition reflected confidence the government majority would see the 2013 budget bill pass, probably around midnight (2200 GMT).
“With today’s vote, we put an end to the Grexit talk,” Simos Kediglou told a Greek television channel, using the term coined for the possibility Greece might force to exit the euro zone.
The measure, following a separate package of belt-tightening approved last week, should ensure Athens receives further credit from international lenders and so avoid imminent insolvency.
However, many of the 10 million Greeks, driven to despair by five years of debt-laden economic slump, fear attempts to cut the public deficit will only deepen the crisis and many poorer citizens say living standards in a country where unemployment is running at 25 percent are becoming hard to bear.
“All those measures throw us back 50 years,” said Thymios Marvitsas, 75, during a communist protest march to parliament during the budget debate. “Our pensions and wages are cut. My life is getting harder and harder.”
Police estimated the crowd outside parliament at 13,000.
Arguments about the wisdom of cutting spending have also divided the political establishment and Sunday’s vote poses a test of confidence in Samaras’s three-party coalition.
It managed to pass Wednesday’s austerity and reform package by only a narrow majority after the smallest of the partners, Democratic Left, abstained. However, its leaders have said the party will vote for the 2013 budget and, with Samaras having nominal support from 168 of the 300 members, it should pass.
Hours later, euro zone finance ministers meet in Brussels for talks likely to be dominated by the Greek crisis though a final decision on extended more credit is not expected.
Securing both pieces of budget-cutting legislation has been a condition of renewing bailout funding and unlocking more than 30 billion euros in financing from the International Monetary Fund and European Union later this month.
The government, formed after a tumultuous election in June, has ignored sliding poll numbers and occasionally violent street protests in pursuit of favor with its creditors.
“Today we must demand sacrifices so there is hope for future generations,” Finance Minister Yannis Stounaras told parliament on Saturday. “Re-establishing our credibility is our only passport to recovery.”
For the opposition, Panagiotis Lafazanis of the leftist SYRIZA party, responded: “For three years you have been going from bailout to bailout, rescue to rescue.
“You’ve already bankrupted the Greek people.”
According to the budget draft, the Mediterranean state’s economy will shrink for its sixth year running, by 4.5 percent.
The budget deficit will be 5.2 percent of gross domestic product (GDP), down from 6.6 percent expected this year. But once the cost of paying interest on its huge debt is removed, Greece will show a tiny surplus for the first time in decades.
These deficit figures assume Athens’s lenders will extend a deadline for it to narrow its fiscal shortfall by two years in exchange for the new belt-tightening package.
The biggest cost-reductions next year are pension cuts of up to 15 percent for almost half the total 9.4 billion euros in budget savings and public wages cuts of 1.2 billion.
Greece’s fiscal adjustment has hit workers more than the wealthy elite. This has become a sore point in a nation where media have published lists of bankers, lawyers and shipping magnates who they say have moved cash to Switzerland.
“It’s always the same. The poor pay and no one touches the rich and the tax evaders. Winter is coming and I can’t afford heat,” said 41-year-old housewife Angeliki Petropoulou.
The budget foresees debt rising to 346 billion euros, or almost 190 percent of GDP, from 175 percent this year.
EU and ECB officials say that means that Athens will not be able to reduce its debt to 120 percent of GDP by 2020, the level the IMF has said is the ceiling for debts to be sustainable in the long term.
That has triggered a debate on how to reduce the debt, which include discussions on cutting interest rates on Greece’s official loans, letting the ECB give profits from Greek bonds it holds back to Athens, helping bail out Greek banks with the EU’s EFSF rescue fund, and other measures.
In comments published by a German newspaper on Sunday, German Finance Minister Wolfgang Schaeuble said the troika of international lenders to Athens was unlikely to deliver a full report in time for Monday’s euro zone finance ministers meeting.
European leaders have been waiting for the report by officials from the three institutions - the IMF, EU and the European Central Bank - before agreeing to extend more loans.
“At the moment it does not look as if we will have a finished, complete troika report on Monday, especially given that the Greek parliament is only agreeing the budget on Sunday,” Schaeuble said ahead of the Eurogroup ministers’ talks.
Time pressure for a deal is growing as Athens has to redeem 5 billion euros ($6.4 billion) worth of treasury bills on November 16 and has been counting on foreign cash to help cover that.
Schaeuble whose country is the biggest contributor to EU budgets, said: “We in the Eurogroup and in the IMF want to help Greece but we will not let ourselves be put under pressure.
“We are not responsible for the time pressure, all parties involved have been aware of this deadline for a long time.”
Additional reporting by Phoebe Fronista; Editing by Anna Willard and Alastair Macdonald