Greek government shifts focus to debt relief after pension, tax reforms

Greece's government has shifted its focus to debt relief following the approval of a controversial pension and tax system reforms bill by the Greek assembly early Monday, as trade unions warned of further strike actions against the new pension cuts and tax hikes.

On the heels of the parliamentary vote, Finance Minister Euclid Tsakalotos arrived in Brussels for the critical Eurogroup meeting on Monday where the agenda was to review the Greek debt program for first time since the third bailout agreement reached in July 2015.

Although no spectacular results were expected from Monday's talks, the Greek left-led government hailed the start of dialogue on debt relief as a significant step on the way to restoring stability and growth in the debt-laden country.

"We have before us an important opportunity for the country to break this vicious circle, to enter the virtuous cycle, and for Europe (an opportunity) to show the necessary courage and bravery to close a deep wound and finally reach the exit from the crisis not only for Greece, but for the whole of Europe," Prime Minister Alexis Tsipras stressed during a televised speech on Sunday night.

Addressing parliament, the Greek premier defended the unpopular bill, which has triggered a wave of strikes and protests over the past six months.

"The plan we are voting on today seeks to create a system that, on the one hand, will be sustainable and guarantee pensions of all Greeks and, on the other hand, will have social justice as basic principle in the current adverse economic conditions," he stated, reassuring that the rich and not the poor would be affected.

However, opposition parties, trade unions and the tens of thousands of protesters who were chanting slogans against the reforms on Sunday have still yet to be convinced the 5.4-billion-euro's worth (6.2 billion U.S. dollars) of budget savings by 2018 will give recession-hit households and enterprises some much-needed breathing space.

Yorgos Mitsis, president of the Greek Federation of Court clerks, was among protesters outside the parliament on Sunday as members of parliament (MPs) were debating the bill on Monday which introduces new reductions on pensions, merges social security funds to save costs, increases contributions, raises income taxes for medium and high earners, and lowers tax-free thresholds.

"I have been working for 31 years, I have been paying contributions to funds for 31 years, but I do not expect to receive any pension in return," he told Xinhua, saying he would keep protesting the policies he and his colleagues believed would impoverish the middle class.

"We continue our struggle. We are abstaining from our duties until the coming Thursday and then we will decide on further actions," he said.

Meanwhile, the self-employed and representatives of small and medium-sized enterprises claimed that under the reforms, they would have to pay some 60 to 70 percent of their revenues in taxation and insurance contributions.

More businesses would be unable to meet the obligations and will close down, Vassilis Korkidis, president of the National Confederation of Hellenic Commerce (ESEE) warned.

The headlines on the front pages of Athens newspapers on Monday also reflected the nation-wide anxiety.

"SYRIZA's austerity hostages" read the headline on the front page of Ta Nea. "Heavy cost from taxes" added Efimerida ton Syntakton. "Taxes even on coffee" was the headline of Eleftheros Typos, in a reference to the indirect tax hikes on coffee, cigarettes, fuel, natural gas, alcohol and tobacco consumption which will be gradually implemented starting this summer.

They are all part of the latest painful package of measures that the EU and the International Monetary Fund have been demanding since autumn to unlock more rescue loans to Greece and discuss debt relief.

Critics of the package, such as Mitsis and Stassinos, argue that Greek society has reached its limits and is fatigued by six years of harsh austerity, meaning Greek citizens will not be able to contribute any more to the country's targets under agreements struck in Brussels.

In the latest development, the Eurogroup meeting on Greek debt ended without a concrete deal on Monday, according to Eurogroup President Jeroen Dijsselbloem.

The Eurogroup hopes to reach a deal with Greece on May 24, when it holds its next scheduled meeting.