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Greek parliament prepares to vote on new austerity package

The Greek parliament is debating a set of tough economic reforms for a final day before voting. The talks have been accompanied by demonstrations and strikes in protest of the planned tax and pensions overhaul.

Greek lawmakers have begun a final day of debate over a new and tough package of reforms that the parliament is to vote on ahead of a crunch meeting of the country's eurozone creditors.

The austerity measures, to the tune of 5.4 billion euros ($6.2 billion), are part of a package of painful reforms that the European Union and the International Monetary Fund (IMF) are demanding in return for an 86-billion-euro bailout agreed to last July in a bid to pull Greece out of its rampant debt crisis.

Growth forecasts published by the European Commission last week estimated that Greece's public debt will rise to 182.8 percent of GDP this year - a record within the eurozone.

Prime Minister Alexis Tsipras of the leftist Syriza party

(picture above) brought forward the vote on the reforms in the hope that a meeting of eurozone finance ministers on Monday can move on from approving the reforms to discuss debt relief for his country.

The IMF believes that the mammoth debt payments currently made by Greece will be unsustainable in the long term.

Rising public anger

The reforms under debate in the Greek parliament would

cut the country's highest pension payouts,

merge several pension funds, increase contributions and hike taxes on medium and high incomes.

The pension cuts

are to save 1.8 billion euros, while the tax reforms are to bring in another 1.8 billion. The parliament will decide later on raising indirect taxes to collect the same sum again.

Tsipras on Friday defended the measures, saying they would spare the poorest, but Greek trade unions

have shown themselves to be unconvinced,

paralyzing public transport across the country with strikes that entered their third day on Sunday.

Athen Generalstreik Demonstration Rentenreform

Thousands have gone on strike and held protests across Greece

Employment Minister Georgios Katrougalos has also stood by the pension reforms, pointing out that 2 billion euros were lacking under the current system.

"This reform should have been done decades ago," he said.

Finance Minister Euclid Tsakalotos, in turn, warned of a "failed state" if the ministers in Brussels did not approve the reforms at their Monday meeting.

"The elements for closing the first review and providing debt relief are, I firmly believe, all there," he said in a letter to the ministers seen by AFP news agency.

'Significant gaps'

This opinion seems to be largely shared by European Commission head Jean-Claude Juncker.

Juncker said in an interview published in Germany on Sunday by Funke media group newspapers that Greece had "basically achieved" the objectives of the reforms. He said that the commission reckoned on a return to growth in the second half of 2016.

But

IMF chief Christine Lagarde

warned there were "significant gaps" in Greece's reform plans. Despite this, she joined with Juncker in calling for debt relief for Athens in a letter to the eurozone finance heads before the meeting.

Christine Lagarde

Lagarde is skeptical that Athens will reach its targets

A major sticking point is "contingency measures" called for by the IMF in case Athens misses its spending targets in 2018. These would require Greece to commit to a further set of reforms that could amount to another 3.6 billion euros.

If the finance ministers do reach an agreement, it would unlock funds allowing Greece to make two big payments to the European Central Bank this summer.

An earlier meeting in Amsterdam on April 22 failed to produce a breakthrough in the assessment of Greece's progress.

tj/rc (AFP, dpa)

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