2 Jul 2011

Greek parliament backs second austerity move

3:30 pm on 2 July 2011

Greece's parliament has passed a second vote on its austerity programme needed to secure the country further financial support.

The vote approved putting into practice the tax increases, pay cuts, privatisations and public sector redundancies approved in principle on Wednesday, the BBC reports.

Prime Minister George Papandreou hailed its passage as "a crucial step" for Greece.

Public reaction has been very hostile, and the debate has been accompanied by strikes and violent protest.

But had the package been rejected, the country could have run out of money within weeks.

The European Union and the International Monetary Fund had demanded that the measures be implemented before they extend further loans to Greece.

With the votes passed, Greece can now receive the latest €12 billion tranche of a €110 billion loan, instead of defaulting.

"We have still many difficult and crucial battles ahead of us," Mr Papandreou told a cabinet meeting after Thursday's bill was passed by 155 votes to 136.

His ruling Panhellenic Socialist Movement has a slim parliamentary majority, with 154 out of 300 deputies.

Italy approves package

Italy's cabinet approved on Thursday an austerity package aimed at shielding the country from the Greek debt crisis and eliminating the budget deficit in 2014.

The package, worth €47 billion must be approved by parliament within 60 days, Reuters reports.

It has heightened tensions within Prime Minister Silvio Berlusconi's centre-right coalition and his restive Northern League ally has warned that the government is at risk until the package is passed.