Greek parliament passes austerity budget

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The Greek parliament approved on early Wednesday the country's 2012 budget designed to tackle a severe debt crisis, amid fresh anti-austerity protests that briefly turned violent on Tuesday.

With the support of the three parties backing the one-month old interim government of Lucas Papademos, the budget that includes further austerity measures, easily cleared the 300-member assembly in the roll-call vote.

With 299 lawmakers present, 258 voted in favor of the budget while 41 voted against.

However, the implementation of the policies outlined in the budget, according to local analysts, is expected to be a difficult task for the administration of the technocrat premier, given the negative climate within Greece and across the euro zone as the crisis adds pressure on neighboring economies.

Despite Wednesday's positive outcome, even parliamentarians who approved the budget expressed scepticism whether deficit cutting targets could be achieved.

Addressing the chamber shortly before the vote, Antonis Samaras, leader of the conservative New Democracy party that supports the government, forecast that recession would exceed 6 percent this year.

"The targets are bold, but feasible, if we will work in a spirit of cooperation," said Papademos during his address, reiterating a pledge that the coalition government will pave the way to end the crisis, before leading Greece to early general elections in early 2012.

According to the draft budget, the Greek economy will shrink by 5.5 percent this year and the contraction will continue for a fifth consecutive year in 2012 with a rate of up to 2.8 percent.

The architects of the 2012 budget forecast that for first time in years Greece will achieve a primary surplus of 1.1 percent of GDP next year.

They also expect that Greek state deficit will be slashed from 9 percent this year against a revised initial goal of 8.5 percent for 2011, to 5.4 percent next year, as long as the Oct. 26 euro zone summit deal for a second bailout loan package to Greece that includes a 50 percent "haircut" on the Greek debt, will be implemented.

As European leaders are due to gather in Brussels again later this week to discuss the handling of the crisis across the continent, the October agreement still needs to be ratified by national governments in coming weeks.

EU Auditors and International Monetary Fund creditors that have supported Greece since May 2010 with bailout loans in exchange of austerity and reform measures to stave off bankruptcy and boost a return to growth by 2014, are expected back in Athens in coming days to review with Greek officials goals for coming months.

International lenders gave the green light over the past few days for the release of the sixth aid tranche to Athens this December to avert a default, but the latest official revenues figures for November 2011 released on Tuesday by the Greek Ministry of Finance were not promising.

They suggested that Greece will miss the targets set for this year and the government will be forced to introduce supplementary policies in early next year.

According to the data, state revenues declined by 13.3 percent on an annual rate in comparison to November 2010, despite the introduction of new taxes in 2011.

Young protesters on the streets of Athens and other major cities on Tuesday chanted that Greek people could not stand any more tax hikes and salary cuts.

Tuesday's rallies that were marred by minor violent clashes between hooded youth and anti-riot police in front of the parliament building, were staged on the third anniversary of the death of a Greek teenager killed by police fire in central Athens that sparked the worst riots in the country in decades.

According to the latest police estimates, 49 protesters were detained on Tuesday and 14 police officers were injured in rock pelting. Hooded anarchists also damaged cars, bus stops and bank branches with firebombs in Athens.

Greek analysts have linked the week-long riots in 2008 with youth's anger over their financial situation, which has deteriorated since the debt crisis broke out.

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