Nov 12, 2012
The Greek parliament has adopted a budget for 2013 that involves 9.4 bn euro of cuts in spending.
The vote paves the ways for Greece’s international creditors to unlock a 31.5 billion euro ($40 billion) tranche of bailout funds.
The budget is forecasting that the economy will shrink by 6.5% this year and 4.5% in 2013.
Greece faces a huge challenge with the economy in its sixth year of recession.
The government in Athens has said it needs the next instalment of its loans, otherwise it will run out of cash on Friday, when five billion euro of treasury bills mature.
However when Eurozone finance ministers meet in Brussels on Monday they are unlikely to see the latest report on Greece’s economic revival from the inspectors of the troika.
Greece needs a good report for the European Central Bank, European Commission and International Monetary Fund, to allow the troika to free up the next tranche of its financial bailout.
Debt problem
Michael Hughes, former chief financial officer at Baring Asset Management, told the BBC that "2013 will be the sixth year that economic growth in Greece is negative, it could be falling around 5%, having fallen by 7% in 2012 and so the debt problem is actually getting worse," he said.
He added: "So for the European finance ministers to actually agree to release more money they need to have some degree of guarantee that this debt problem is going to be contained at some stage."
Prime Minister Antonis Samaras has promised this will be the last round of tough austerity measures the country has to endure.
Financial bailouts
Greece joined the euro currency area in 2001, but after several years of unsustainable borrowing the government was forced to call on its partners in the European Union and the International Monetary Fund for a financial bailout.
Greece secured a bailout worth 110 bn euros ($142 billion) from the EU and IMF in 2010.
A second package was agreed earlier this year involving 130 bn euros in loans, in addition to 107 bn euro write off of debts owed to the private sector.
Greece’s debt is forecast to rise to 346 bn euros, or 189% of GDP in 2013.
However severe cuts in spending are hampering efforts to revive the economy and austerity is hitting the Greek people hard.
Unemployment reached a record of 25.4% in August, with 1.27 million people out of work. Young people are suffering, as about six in 10 workers under the age of 24 are without a job.
Source：bbc.co.uk