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Greece passes 2014 'growth' budget


Greek prime minister Antonis Samaras delivers a speech before the 2014 budget vote. (AP)

Greek prime minister Antonis Samaras delivers a speech before the 2014 budget vote. (AP)

Greek prime minister Antonis Samaras delivers a speech before the 2014 budget vote. (AP)

Greece's 2014 budget, which forecasts a return to growth after six consecutive years of deep recession, has been passed by MPs.

But its revenue and spending targets have been contested by the country's creditors who have provided more than 240 billion euros (£201bn) in bail-out aid since 2010 to keep the heavily-indebted nation from bankruptcy.

As expected, the government coalition of conservatives and socialists held together for the vote, with 153 MPs in the 300-member parliament voting for the budget, 142 voting against and one voting "present".

A deputy and ex-minister from the ruling conservative New Democracy party was absent and three MPs from the extreme-right Golden Dawn party, including its leader, could not vote, because they have been jailed pending trial charged with membership in a criminal organisation.

"This is the first decisive step in exiting the bail-out," prime minister Antonis Samaras said in his speech that concluded a three-day debate.

He noted that the budget forecasts a modest growth for the economy, 0.6% in 2014, the first positive figure since 2007. Greece has been through six years of deep recession that have shrunk its economy nearly 30%. The economy will still shrink 4% this year, still better than forecast earlier, as Mr Samaras noted.

Mr Samaras said his government had exceeded four of five major targets it had set this year, coming up short only on unemployment, which remains stuck above 27%. But he said, there were "revolutionary" developments in 2013, such as a small primary surplus of 800 million euros (£670m) and a current account surplus, both for the first time in decades.

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The primary surplus - revenue exceeding spending, excluding the cost of servicing the debt - is set to rise to three billion euros (£2.5bn) in 2014 and further in later years, eventually leading to overall surpluses.

"It means that we will no longer need additional borrowing," Mr Samaras said, adding that this meant that Greece needed only a further 10 billion-euro (£8.3bn) haircut in its debt next year to make it viable.

The haircut agreed in principle by Greece's creditors once it achieved primary budget surpluses, is a politically sensitive issue because, unlike the massive 172 billion-euro (£144bn) debt write-down agreed in 2012, which affected private bondholders, it would affect the creditors, including the European Union, directly.

The creditors, however, have disputed the Greek government's figures, arguing the surpluses will be less than advertised and that further belt-tightening measures will be needed.

Disagreements on issues such as the fate of Greece's defence industries (which the creditors want liquidated), public sector job losses and mortgage foreclosures have led to a suspension of the talks with the creditors and a delay in bail-out funding.

Minutes before last night's vote on the budget, both the International Monetary Fund and the European Commission released statements that talks between their delegation heads and Greek officials will resume in January, and not next week as the Greek government had announced.

"Technical discussions are expected to continue in Athens next week. We expect a full negotiating team to return to Athens in January, after the authorities have made further progress in implementation, with the objective of reaching a staff level agreement," an IMF spokeswoman said.


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