Greece passes fast-track reform package to unlock bailout cash

Greece’s parliament on Thursday passed a fast-track reform package to unlock bailout funds and wrap up a fourth and final review of its loan programme as it seeks more debt relief from its official creditors next week.

Greece is due to exit its latest bailout programme in August and will then have to rely on financial markets to cover its borrowing needs.

The country has a debt-to-GDP ratio of 179.8 percent, the highest in the 19-nation euro zone.

Athens is keen to pass the final review of the country’s compliance with reforms prescribed in its bailout before a euro zone finance ministers meeting on June 21.

A green light on the review would release about 12 billion euros ($13.97 billion) of new loans from Greece’s latest 86 billion euro bailout, its third since 2010.

The final payment from the bailout funds would add to a cash buffer the Greek government is creating and could serve as a fall-back option for refinancing needs.

Lawmakers passed the reform package 154-to-144 in the 300-seat parliament. It was endorsed by lawmakers of the leftist-led alliance while all other opposition parties voted it down.

“This government smothered Greeks with taxes. It crushed growth and pushed the middle-class to poverty,” said conservative opposition leader Kyriakos Mitsotakis during a heated debate on the reforms bill.

“You created a large mass of desperate people who are drowning in debt and have no hope for the future,” he said.

Athens has agreed to adhere to a post-bailout fiscal trajectory that targets primary budget surpluses – excluding debt servicing outlays – of 3.5 percent of GDP until 2022 and of at least 2.0 percent thereafter.

This gives the government little room for manoeuvre for tax relief unless it fiscally outperforms, generating even larger budget savings.

The reform package legislation includes measures to expedite privatisations in the energy sector and tweaks in real estate taxes.

It also outlines measures that will go into effect in the post bailout period such as extra pension cuts in 2019 and a lower tax exempt threshold in 2020.