Greece’s Parliament Begins Debating First Austerity Bill

Ministers to vote Friday on further economic overhauls agreed in new bailout program

The Wall Street Jornal

By NEKTARIA STAMOULI

Oct. 12, 2015 12:29 p.m. ET

ATHENS—Greece’s parliament Monday began debating the first bill containing tough austerity measures and economic overhauls agreed under its new bailout program.

The bill, which is expected to go to a vote on Friday, includes stricter pension rules, tax hikes and tougher fines for tax evasion.

Under the deal Greece struck with its international creditors, which foresees up to €86 billion ($96 billion) in fresh loans, the omnibus bill—so-called because it wraps a number of proposed reforms into one bill—will pave the way for the disbursement of the next €2 billion in bailout funds.

Despite the harsh austerity measures included in this set of proposed measures, the bill is expected to be supported by the country’s coalition government, without suffering any losses.

The ruling coalition, elected late September, is made up of the left-wing Syriza party and its junior coalition partner, the right-wing nationalist Independent Greeks. It holds a slim majority of 155 seats in the 300-seat legislature.

Greek Prime Minister Alexis Tsipras, first elected in January, dropped his ardent opposition to further austerity in July and agreed to a tough third bailout deal, a move seen as necessary to avoid a chaotic exit from the eurozone. He called snap elections in a successful bid to jettison doubters in his party, securing a comfortable win and a mandate to push through the deal.

Since returning to the premier’s seat, the 41-year-old leader has affirmed his commitment to the new bailout program, despite its tough austerity requirements.

The bill tabled in parliament on Monday includes a gradual increase of the retirement age and higher penalties for those granting early retirements. It also includes a tighter legal framework for tax evasion; changes in the legal framework for the settlement of tax arrears; and increases in the tax rate of rental income. The new legislation foresees the facilitation of the gas market’s liberalization; changes in road haulage and arrangements for the operation; and management of railway activities.

A second, more difficult, set of economic and financial overhauls is expected to be tabled and voted on in parliament by mid-November to unlock a €1billion second tranche of funding.

This is expected to include more painful measures including increasing taxation for farmers, further pension reductions and arrangements for privatizations.

Last week, Greece’s Prime Minister Alexis Tsipras said the government aims to achieve a swift and successful conclusion of the first review of the country’s bailout program by the end of November. This will pave the way for the recapitalization of Greek banks to be concluded by the end of the year, before the deposit bail-in instrument becomes effective at the beginning of 2016.

By clearing these difficult hurdles in the next couple of months, the government hopes that it will be able to begin talks on Greece’s debt restructuring with its euro area partners.

Greece’s Finance Minister Euclid Tsakalotos met International Monetary Fund managing director Christine Lagarde in Lima on Sunday on the sidelines of the fund’s annual meeting.

“Ms. Lagarde appreciates the effort that the Greek government is making so the first review is completed on time, allowing the bank recapitalization to progress before January 1, 2016, as planned,” said Mr. Tsakalotos in a statement after the meeting.

“Straight after that, a discussion about debt will begin so that the necessary conditions can be created for Greece to turn the page and so the exit from the crisis becomes tangible,” he said.

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