Greek parliament approves 2017 budget

Greek lawmakers approved on Saturday the country's 2017 budget which projects a strong return to economic growth next year but also imposes a wave of tax hikes and austerity cuts prescribed by its international lenders. Athens estimates its economy will expand by 2.7 percent in 2017, supported by the trickle-down impact of bailout cash inflows and resurgent private demand. It also sees a primary surplus - excluding debt servicing costs - of 2 percent of GDP.
If attained, it would be the first signs of growth for the recession-battered economy since a brief period in 2014. Public spending on salaries and pensions will also be cut by 5.7 billion euros next year. Thousands of Greeks took part in union demonstrations and a general strike this week against the new cuts, but the leftist government majority is expected to approve the budget despite the misgivings of many of its lawmakers.
Prime Minister Alexis Tsipras needs to stay on good terms with EU-IMF creditors to conclude an ongoing reforms audit early next year. Greece hopes that a deal will persuade the European Central Bank (ECB) to include Greek sovereign debt in its asset purchase programme, known as quantitative easing, or QE. Without access to QE, the country will not be able to make a planned return to debt markets by early 2018, according to the Greek finance ministry.
Last week, eurozone lenders approved short-term relief measures to help Greece manage repayment on its huge public debt, which will reach 315 billion euros this year, according to the latest EU data. But Germany, facing public bailout fatigue and federal elections next year, has led a hardline stance among eurozone lenders to force Greece to adopt austerity reforms well beyond the end of its present bailout 2018.
Hardline EU states also want Greece to run a primary surplus, after debt servicing, of 3.5 percent of gross domestic product (GDP), beyond 2018. Athens has flatly refused to consider further austerity measures beyond 2018. Tsipras on Thursday made a surprise move, announcing a one-off payout to 1.6 million low-tier pensioners, and a sales tax break for islands sheltering thousands of migrants. The European Commission said it was "not made aware of all the details of the announcement before they were made" and would need to study the 617-million-euro package "before commenting any further or acting further."