Greece will save over 10 billion euros on salaries and pensions

The Greek parliament adopted an austerity budget for 2013 on Monday night, despite massive street protests, which will allow the official Athens to continue receiving financial aid from abroad and avoid state bankruptcy.

The budget was supported by all three parties in the ruling coalition of conservative Prime Minister Antonis Samaras, meaning it passed with a more convincing majority than a separate law on new austerity measures on Wednesday, during which some of Samaras’s parliamentary allies abstained. The adoption of both of these acts was necessary to unlock a new tranche of EU and IMF aid worth 31.5 billion euros before the government in Athens runs out of money.

“The sacrifices we are making in that law and in the budget for next year are the last. We will start correcting some injustices from them as soon as we emerge from losses. But the reforms we initiated earlier are permanent and will bring growth to our economy,” said Prime Minister Samaras in parliament before the vote. His critics are skeptical about this, but it seems that the level of public anger after years of growth shows signs of fatigue. Significantly fewer people participated in the protests in front of parliament on Sunday evening than usual, with police estimates around 13,000. Last week, there were nearly 100,000 dissatisfied people on the streets of Athens.

Many of the 10 million Greeks, driven to despair by the economy’s decline for five consecutive years and sharp reductions in living standards, fear that additional budget cuts will only deepen the crisis. The Greek economy is expected to contract by 4.5 percent next year, the sixth consecutive year, and public debt (346 billion euros) is projected to rise to 189 percent of GDP. However, the budget deficit will be 5.2 percent of GDP, down from 6.6 percent this year, and when the cost of servicing the massive Greek debt is excluded, Greece will be in a small surplus for the first time in several decades. The biggest sacrifice in the new budget will be borne by retirees and public servants, from whose incomes savings of 10.6 billion euros are planned.