Greece’s financial future started to shine after the Greek parliament paved the way for new aid of the bailout package agreed last year from international lenders by introducing a new tax on property, considered the most unpopular austerity measure so far, but which avoids the stat default in the short-term. The level of participation of private creditors in the debt exchange program agreed in July to the Greek State has reached the target of 90% and could even increase, said a source from the Greek Ministry of Finance for Naftemporiki newspaper, according to Reuters.
The participation of private investors is part of the second aid package set for Greece, this summer, by the EU, IMF and European Central Bank since the measures agreed in the first program failed to restore the standing of Greek finances. The plan provides for conversion of bonds totaling 135 billion, with maturity in 2020, in securities with a maturity of up to 30 years. Private creditors have accepted by the agreement in July a loss of 21% of state of the Greece’s debt exposure. The introduction of the law on property tax passed in parliament with 155 votes “for” and 142 “against”, but amid large public protests that have paralyzed Greek capital Athens.
The vote was a crucial test for the socialist government ability to apply new austerity measures in the coming weeks and to meet targets set for the budget deficit this year and next year, according to The Wall Street Journal. These measures involve reducing pensions and public sector wages and arouse fears of a revolt in the ruling party.
Those who do not pay property tax will have electricity cut
Property tax will be collected through the electricity bill and could burden the household bills by 1,000-1,500 euros per year, writes The Guardian. People who do not pay the property tax, will have electricity cut.
Greece will get eight billion euros of the foreign aid by mid-October to avoid bankruptcy, a collapse that would send shockwaves throughout world markets.
German Chancellor Angela Merkel assured after a discussion with Greek Prime Minister George Papandreou that Germany will provide Greece “all necessary assistance”. Merkel also said that Greece wants a stronger euro. “Through euro, we are very much related, and weaknesses of one affects us all”, said the Chancellor.
Greece is determined to endure austerity
Papandreou, however, is committed to implement the reforms demanded by international lenders. “These are times that require great sacrifices from the Greeks. It is therefore very important to receive signals of support from European partners”, said the Greek Premier. He added that by 2012 Greece will have a budget surplus. A mission of experts from the EC, ECB and IMF are in Athens this week to assess the progress in reducing Greece debt. The mission will decide whether or not Greece will continue to receive financial aid.