Greek Parliament Approves 2014 Budget

Move Comes As the County and Bailout Creditors Are at Odds Over Budget Cuts for Next Year

The Wall Street Journal

Greece's parliament early Sunday morning approved the government's 2014 budget, ahead of an important meeting of eurozone finance ministers next week and despite not having agreed with bailout creditors over further cutbacks needed for next year.

By Nektaria Stamouli

ATHENS—Greece’s parliament early Sunday morning approved the government’s 2014 budget, ahead of an important meeting of eurozone finance ministers next week and despite not having agreed with its bailout creditors over further cutbacks needed for next year.

On Saturday, a European Commission spokesman said negotiations between Greece and its international creditors over the country’s bailout won’t fully resume until January, though he added that a small team of experts representing creditors will arrive in Athens Wednesday.

The Greek budget was supported by the two-party coalition of the conservative New Democracy and the socialist, or Pasok, parties. In the final tally, 153 deputies backed the government versus 142 against, with the rest either abstaining or failing to cast a vote.

The approved budget shows a more robust primary surplus than previously expected for this year, Greece’s first in a decade, strengthening Athens’s hand in negotiations with its creditors. A primary surplus excludes debt payments.

“[The next year] will be a year of recovery after six painful years of recession,” Prime Minister Antonis Samaras told parliament before the vote. “And this will be done for the first time without further borrowing, but with [fiscal] consolidation and a budget surplus.”

According to the budget, Greece expects to a primary surplus of 812 million euros ($1.09 billion) for 2013, double the government’s own forecasts of just two months ago, something that bodes well for meeting next year’s fiscal targets as well.

Despite the government not having reached a final agreement with inspectors from Greece’s three bailout creditors—the International Monetary Fund, the European Central Bank and the European Union Commission—the new budget foresees some onerous measures, such as a new property tax and further cuts in public health, that were at the forefront of a five-day debate in Parliament preceding the vote.

The property tax measure aims to overhaul and unify several existing real estate taxes and has been one of the sticking points with the troika of creditors, who question Greece’s ability to collect the new tax and would prefer the old property tax rules remain in place.

A bill formally implementing the new property tax, as well as legislation that partially lifts a ban on home foreclosures, is due to be submitted to Parliament next week and is seen as a crucial test for the ruling coalition, which faces resistance from many of its own lawmakers over the structure of the levy.

Meantime, the bailout creditors are expected to send a scaled-back team of experts to meet with Greek officials in a few days, before full-scale talks resume next month. “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,” Simon O’Connor, a spokesman for the commission said in a written statement late Saturday night.

The experts are expected to return to Athens after the eurozone finance minsters meet on Dec. 9. They are reviewing whether Greece is complying with conditions for its bailout package. Deliberations have already been interrupted twice since September, with the officials bogged down in a dispute over further austerity measures Greece must take to meet budget targets next year. The creditors say the country must make roughly EUR2 billion in further spending cuts to meet its fiscal goals next year.

Athens says the shortfall is half that amount and that it can meet its targets through less onerous means, such as recouping money lost to tax evasion and welfare fraud.

Time lost to this dispute means Greece may well not receive a delayed one-billion-euro payout from its bailout program, which had been due to be released over the summer, until January. However, Greek media, citing government officials, said the EUR1 billion tranche could still be dispatched in December.

Earlier Saturday, Greece’s main union umbrella groups—the private-sector GSEE and public sector ADEDY—held a rally in Syntagma square, the central square of the Greek capital and just outside Parliament. The two unions oppose the country’s continuing austerity program that has led to steep cuts in public-sector wages and benefits over the past four years and which have pushed the Greek economy into a deep recession.

Since 2010, Greece has secured two international bailouts worth EUR240 billion in exchange for undertaking tens of billions of euros worth of austerity measures to fix its finances and restructure its economy. But the reforms have come at a cost: Greece’s economy is now in its sixth year of a deep recession, with only an anemic recovery forecast for 2014, shaving a quarter off economic output over that time and sending unemployment to 27%.

-Matina Stevis contributed to this article.

Write to Nektaria Stamouli at nektaria.stamouli@wsj.com