Greece taps bail-out to pay debt ahead of strikes

Fridge magnets depicting ancient Greek temples, theatre masks and statues as a sign offers reduced prices, in the tourist Monastiraki district of Athens, on Tuesday. Photo: AP.  

Greece on Wednesday paid a nine billion euro (11 billion dollars) debt after receiving last minute European Union emergency loans just as the government faces a new round of strikes against its austerity measures.

The 10—year bond repayment had triggered fears of a debt default that shook the euro currency and international markets for months.

Greek finance ministry officials said it managed to meet payment after receiving a vital 14.5—billion—euro bail—out loan from the European Union on Tuesday.

The 14.5—billion—euro loan instalment from the European Union is part of a larger 110—billion—euro package from the EU and the International Monetary Fund.

Athens has said it could not pay off its maturing debt without the emergency loans and that the rescue package is vital for Greece to avoid defaulting on its debt and plunging the shared euro into crisis.

Greece drew the first package funds from the IMF, totalling 5.5 billion euros, last week.

The next tranche of funds from the IMF and the EU will arrive in August, in time for Greece to meet its next major payment deadline in March 2011 when it must redeem a three—year bond worth 8.6 billion euros.

In exchange for the loans, the Socialist government under the leadership of George Papandreou has had to pass a series of austerity measures — which include salary rollbacks, pension cuts and consumer tax hikes — and cracking down on corruption and tax evasion.

In what is seen as a blow to the credibility of Papandreou’s government, Greece’s tourism minister resigned on Monday after tax officials said her husband, a popular singer, owed the government more than 5 million euros in unpaid taxes.

Tourism Minister Angela Gerekou handed in her resignation hours after press reports, which were later confirmed by the Finance Ministry, revealed her husband, Tolis Voskopoulos, faces criminal prosecution for unpaid taxes and fines.

Reports said Ms. Gerekou, a former actress, landed her first government job as deputy culture minister in charge of tourism when the Socialists won elections in October. She filed joint tax declarations with Voskopoulos for years.

Economists have expressed concern that the Greek economy may plunge even deeper into recession due to its drastic belt—tightening measures.

The debt crisis and subsequent public spending cuts and tax hikes have sparked protests and riots in Greece, leaving three people dead when a bank was firebombed earlier this month.

European Union policymakers and investors are closely monitoring public reaction amid concerns that large scale social unrest could prevent the government from pushing through the measures.

The austerity programme has put the government up against the country’s largest unions, which have so far staged three strikes in protest and are planning a fourth on May 20.

The latest walkout is expected to disrupt sea and rail travel, and shut down ministries across the country.

Greece’s main unions, which together represent about 2.5 million workers, around half of the nation’s workforce, said they would carry out more strikes in June to protest against a pension reform bill they say will further burden the poor.

The bill, which will be voted on in parliament in June will raise the retirement age and discourages workers from taking their pension early.

Despite the frequency of the protests, opinion polls show that while most Greeks agree the austerity measures are necessary, the majority believe the poor and middle class are shouldering the weight of the measures while the rich evade taxes.

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Printable version | Jan 28, 2022 3:24:50 PM |

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