20 Oct 2011

Further austerity measures approved in Greece

1:18 pm on 20 October 2011

Despite rioting in central Athens, the Greek Parliament on Wednesday gave initial approval to further austerity measures to tackle its debt and meet tough demands from the European Union and International Monetary Fund in order to receive bailout funds.

Earlier, riot police fired tear gas and fought running battles with protesters, amid a 48-hour general strike that has paralysed the country.

Petrol bombs and stones were thrown at the police outside parliament in Athens, as a march by more than 70,000 people in central Athens turned violent.

The BBC reports public anger has been growing in recent weeks at the latest round of austerity proposals.

Greece is struggling to reduce a huge government deficit amid fears it may default and set off a crisis, engulfing other eurozone countries like Spain and Italy.

The EU and IMF have demanded tough cuts in return for two bailout packages.

One round of austerity measures has so far been introduced by the government.

Prime Minister George Papandreou has described the situation as a war Greece must win.

And Foreign Minister Stavros Lambrinidis said people taking to the streets had to realise that the budget cuts were the only way ahead.

Commentators say Greece's creditors will have to accept bigger writedowns of what they're owned than the 21% being proposed.

Parliament is voting on Wednesday and Thursday on a further round, including plans for temporary lay-offs of 30,000 public sector workers and further cuts to pensions and salaries.

Extent of strike

The strike has closed government departments, businesses, offices and shops.

Air traffic controllers are staging a 12-hour walkout, with some 150 domestic and international flights cancelled.

The BBC reports the latest strike was accompanied by huge rallies across the country organised by trade unions.

Greece has rising unemployment and a stalled economy. It is saddled with a government debt that is 162% of its gross domestic product.

Last year the EU set up a central bailout fund and agreed to provide Greece with 110 billion euros ($US152 billion).

But the loan failed to stabilise the country's economy and the EU later agreed another 109 billion euro package.