ATHENS-Protests erupted today as Greek lawmakers consider votes to approve austerity measures, including new taxes, to fulfill promises made to continue earning billions of dollars in rescue aid from the European Union and the International Monetary Fund. It’s not clear that the politicians will pass the measures, but an EU official said there is no other option but default.
The country will reportedly run out of cash by mid-July unless it receives another $17 billion in aid. The EU and IMF have agreed to provide $40 billion in aid, but insist on the Greek government making massive spending cuts and tax hikes.
In response, unions in the country called a two-day strike, and a few peaceful protests have reportedly led to clashes with the government. The lawmakers have until Thursday to approve the austerity plan.
Olli Rehn, EU economics commissioner, said in a statement today that the future of the country and the financial stability in Europe are at stake. “The only way to avoid immediate default is for Parliament to endorse the revised economic program. The program includes both the medium-term fiscal strategy and the privatization plan. They must be approved if the next tranche of financial assistance is to be released,” Rehn said in a statement. “There is no plan B to avoid default. Europe can only help Greece if Greece helps itself.”
The EU and IMF are providing slices of rescue loans totaling $156 billion. Many economic experts believe all of Europe could suffer greatly, and even world financial markets will again stumble, if a country such as Greece falls into default.
In the statement, Rehn encouraged the country’s leaders to fight tax evasion and encourage real entrepreneurship that supports honest work. “I therefore support the Government's objective of reforming and simplifying the tax system from this autumn. The reform should aim to simplify the tax code, broaden the tax base and reduce tax rates in a fiscally neutral way. If the expenditure containment objectives are achieved and surpassed, this will then pave the way for a more growth-friendly tax system,” he said.
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