Third austerity package (Greece)
Third austerity package | |
---|---|
Hellenic Republic | |
Territorial extent | Greece |
Enacted by | Hellenic Parliament |
Date passed | 29./30. June 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 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 submitted to Parliament on 4 May and approved on separate votes on 29 and 30 June.[3][4] It was met with a nationwide general strike and massive protests the following day, with three people being killed, dozens injured, and 107 arrested.[2]
Specific measures
The measures include:[5][6][7]
- An 8% cut on public sector allowances (in addition to the two previous austerity packages) and a 3% pay cut for DEKO (public sector utilities) employees.
- Public sector limit of €1,000 introduced to bi-annual bonus, abolished entirely for those earning over €3,000 a month.
- Limit of €500 per month to 13th and 14th month salaries of public employees; abolished for employees receiving over €3,000 a month.
- Limit of €800 per month to 13th and 14th month pension instalments; abolished for pensioners receiving over €2,500 a month.
- Return of a special tax on high pensions.
- Extraordinary taxes imposed on company profits.
- Rise in the value of property (and thus higher taxes).
- Rise of an additional 10% for all imported cars.
- Changes were planned to the laws governing lay-offs and overtime pay.
- Increases in value added tax to 23% (from 19%), 11% (from 9%) and 5.5% (from 4%).
- 10% rise in luxury taxes and sin taxes on alcohol, cigarettes, and fuel.
- Equalisation of men's and women's pension age limits.
- General pension age has not changed, but a mechanism has been introduced to scale them to life expectancy changes.
- A financial stability fund has been created.
- Average retirement age for public sector workers will be increased from 61 to 65.[8]
- The number of public-owned companies shall be reduced from 6,000 to 2,000.[8]
- The number of municipalities shall shrink from 1,000 to 400.[8]
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.[9]
In total, €110 billion have been agreed on.[10][11] 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).[12] According to EU officials, France and Germany[13] demanded that their military dealings with Greece be a condition of their participation in the financial rescue.[14]
As of 12 May 2010, the deficit was down 40% from the previous year.[8]
See also
- First austerity package (Greece)
- Second austerity package (Greece)
- Fourth austerity package (Greece)
- Fifth austerity package (Greece)
- Sixth austerity package (Greece)
- Seventh austerity package (Greece)
References
- ↑ Helena Smith (9 May 2010). "The Greek spirit of resistance turns its guns on the IMF". The Guardian (UK). Retrieved 10 May 2010.
- ↑ 2.0 2.1 Judy Dempsey (5 May 2010). "Three Reported Killed in Greek Protests". The New York Times. Retrieved 5 May 2010.
- ↑ 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.
- ↑ Maltezeu, Renee (30 June 2011). "Greek finance minister welcomes austerity bill approval". Reuters. Retrieved 30 June 2011.
- ↑ "Fourth raft of new measures" (in Greek). In.gr. 2 May 2010. Retrieved 6 May 2010.
- ↑ "Greece police tear gas anti-austerity protesters". BBC News. 1 May 2010.
- ↑ "Fourth raft of new measures" (in Greek). In.gr. 2 May 2010. Retrieved 5 May 2010.
- ↑ 8.0 8.1 8.2 8.3 Friedman, Thomas L. (14 May 2010). "Greece's newest odyssey". San Diego, California: San Diego Union-Tribune. pp. B6.
- ↑ "Greek Bailout Talks Could Take Three Weeks". Bloomberg L.P.
- ↑ Gabi Thesing and Flavia Krause-Jackson (3 May 2010). "Greece Gets $146 Billion Rescue in EU, IMF Package". Bloomberg. Retrieved 6 May 2010.
- ↑ Kerin Hope (2 May 2010). "EU puts positive spin on Greek rescue". Financial Times. Retrieved 6 May 2010.
- ↑ 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."
- ↑ "Why the Euro Crisis is a Political Crisis". ForexNewsNow. 19 September 2011. Retrieved 19 September 2011.
- ↑ Christopher Rhoads (10 July 2010). "The Submarine Deals That Helped Sink Greece". The Wall Street Journal. Retrieved 19 September 2011.