Greece has been forced to face a fresh round of austerity cuts in order to secure international debt aid to pay off previous help from the International Monetary Fund and the and European Union.
The new cuts package – dubbed “the cutter” in the Greek media – is reported to be the most punitive yet and reverses the government’s previous stand against austerity measures.
It includes tax increases amounting to £1.4 billion, taxes on coffee and luxury goods, the creation of a privatisation fund, the sale of tens of thousands of public properties and an increase in VAT from 23 per cent to 24 per cent.
The shadow minister for development, Anna Asimakopoulou, said: “They are selling everything under the sun except the Acropolis. We are giving up everything.”
In tough and emotional negotiations, Prime Minister Alexis Tsipras managed to win the support of 152 of his Syriza party MPs in order to push the finance package through the Athens parliament.
One, Giorgos Dimaras, said he was appalled at having to vote for measures he had spent so much of his political life opposing. “I am in mourning”, he said.
Under pressure from the EU and the Washington-based IMF, the Greek government has agreed to adopt tighter austerity in the form of an “automatic fiscal break” –the so-called cutter – as part of a strategy for meeting fiscal targets.
It is part of a series of “prior actions” Greece has been told to take to reassure the EU and IMF that it is capable of implementing cuts to ensure it can meet 3.5 billion euro in debt repayments this summer, beginning with a 300 euro loan instalment to the IMF on June 7 – money the IMF believes the country simply does not have. Greece’s total international debt stands at around 320 billion euro.
EU finance ministers have rejected any outright write-down of debt, insisting that there can be no discussion of further debt relief until the current bailout programme is finalised in 2018.