Third austerity package (Greece)

Third austerity package - The first memorandum
Coat of arms of Greece
Hellenic Republic
Measures for implementing the support mechanism of the Greek economy by the member-states of the Eurozone and the IMF (Law 3845/2010)
Territorial extent Greece
Enacted by Hellenic Parliament
Date passed 6 May 2010 (For: 172; Against: 121; 3 Abstentions)
Date assented to 6 May 2010
Date commenced 6 May 2010
Introduced by Government of Greece
Status: In force

The Third austerity package is part of the countermeasures of the Greek government to counter the Greek government-debt crisis. It came with the signing of the First Economic Adjustment Programme for Greece known as First Memorandum with the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB). It was announced in May 2010 and approved by the Hellenic Parliament in June 2010.

Background

On 1 May 2010, Prime Minister George Papandreou announced a new round of austerity measures, which have been described as "unprecedented".[1] The proposed changes, which aim to save €38 billion through 2012, represent the biggest government overhaul in a generation.[2] The bill was met with a nationwide general strike and massive protests the following day, with three people being killed, dozens injured, and 107 arrested.[2]

Vote in Parliament

The bill was submitted to Parliament on 4 May and approved on 6 May.[3][4] Out of 160 MPs consisting the PASOK government majority, 157 MPs supported the passing of the bill, while 3 MPs abstained. ND, SYRIZA and KKE voted against the bill; however, Dora Bakoyianni of ND voted for the bill in principle and was subsequently expelled from ND. LAOS voted for the bill.

Further separate votes on 29 and 30 June were held to implement portions of the package.[5][6]

Specific measures

The measures include:[7][8][9]

Implementation

On 2 May 2010, a loan agreement was reached between Greece, the other eurozone countries, and the International Monetary Fund. The deal consisted of an immediate €45 billion in loans to be provided in 2010, with more funds available later. The first instalment covered €8.5 billion of Greek bonds that became due for repayment.[13]

In total, €110 billion have been agreed on.[14][15] The interest for the eurozone loans is 5%, considered to be a rather high level for any bailout loan. The European Monetary Union loans will be pari passu and not senior like those of the IMF. In fact the seniority of the IMF loans themselves has no legal basis but is respected nonetheless. The loans should cover Greece's funding needs for the next three years (estimated at €30 billion for the rest of 2010 and €40 billion each for 2011 and 2012).[16] According to EU officials, France and Germany[17] demanded that their military dealings with Greece be a condition of their participation in the financial rescue.[18]

As of 12 May 2010, the deficit was down 40% from the previous year.[10]

See also

References

  1. ↑ Helena Smith (9 May 2010). "The Greek spirit of resistance turns its guns on the IMF". The Guardian. UK. Retrieved 10 May 2010.
  2. 1 2 Dan Bilefsky (5 May 2010). "Three Reported Killed in Greek Protests". The New York Times. Retrieved 5 May 2010.
  3. ↑ "Greek parliament votes in favour of austerity measures". bbc.co.uk. 6 May 2010. Retrieved 11 August 2013.
  4. ↑ "Greece agrees to cuts package". London: independent.co.uk. 6 May 2010. Retrieved 11 August 2013.
  5. ↑ Weeks, Natalie; Bensasson, Bensasson (30 June 2011). "Papandreou Wins Vote on Second Greek Austerity Bill in Bid for More EU Aid". Bloomberg News. Retrieved 30 June 2011.
  6. ↑ Maltezeu, Renee (30 June 2011). "Greek finance minister welcomes austerity bill approval". Reuters. Retrieved 30 June 2011.
  7. ↑ "Fourth raft of new measures" (in Greek). In.gr. 2 May 2010. Retrieved 6 May 2010.
  8. ↑ "Greece police tear gas anti-austerity protesters". BBC News. 1 May 2010.
  9. ↑ "Fourth raft of new measures" (in Greek). In.gr. 2 May 2010. Retrieved 5 May 2010.
  10. 1 2 3 4 Friedman, Thomas L. (14 May 2010). "Greece's newest odyssey". San Diego, California: San Diego Union-Tribune. pp. B6.
  11. ↑ Thomas Jr, Landon; Kitsantonis, Niki (8 July 2010). "Greece Approves Pension Overhaul Despite Protests". nytimes.com. Retrieved 11 August 2013.
  12. 1 2 "Greek pensions: Why they are a flashpoint". The Economist. 18 Jun 2015. Retrieved 30 Jun 2015.
  13. ↑ "Greek Bailout Talks Could Take Three Weeks". Bloomberg L.P.
  14. ↑ Gabi Thesing and Flavia Krause-Jackson (3 May 2010). "Greece Gets $146 Billion Rescue in EU, IMF Package". Bloomberg. Retrieved 6 May 2010.
  15. ↑ Kerin Hope (2 May 2010). "EU puts positive spin on Greek rescue". Financial Times. Retrieved 6 May 2010.
  16. ↑ Global Economics Flash, Greek Sovereign Debt Restructuring Delayed but Not Avoided for Long, 5 May 2010, "The amount of fiscal tightening announced over the next three years is even larger than we expected: €30 bn worth of spending cuts and tax increases, around 12.5% of the 2009 Greek GDP, and an even higher percentage of the average annual GDP over the next three years (2010–2012). With 5 percentage points of GDP tightening in 2010 and 4 percentage points of GDP tightening in 2011, the economy should contract quite sharply – between 3 and 4 percent this year and probably another 1 or 2 percent contraction in 2011."
  17. ↑ "Why the Euro Crisis is a Political Crisis". ForexNewsNow. 19 September 2011. Retrieved 19 September 2011.
  18. ↑ Christopher Rhoads (10 July 2010). "The Submarine Deals That Helped Sink Greece". The Wall Street Journal. Retrieved 19 September 2011.
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