Greek Parliament passes controversial reforms
Amidst protests, the Greek Parliament has passed the controversial tax and pension reforms to get the much-needed bailout money released from creditors. Creditors had asked Greece to stick to spending cuts to reduce public debt. Alexis Tsipras, the Greek Prime Minister has defended the reforms by saying that it would not affect the majority of pensioners and help move towards a "sustainable" system.
Greece is a European nation situated in the far south of the Balkan peninsula in Southeastern Europe. The Mediterranean nation, famous for its rich historical and cultural heritage has a population of 11.5 million. Greece is a part of the European Union and has Greek as the major language. Greece has not been able to recover from the global financial meltdown of 2008.
Years of recession has contracted the Greek economy by a quarter and increased unemployment. The country was staring at a mounting debt crisis when the anti-austerity coalition led by the leftist Syriza party came to power in 2015 with a promise of renegotiating the IMF-EU bailouts. Syriza argued that austerity has crippled the economy and affected Greece's ability to repay loans back to creditors.
After failing to repay €1.6 billion, Greece became the first developed nation to default on a loan with the International Monetary Fund (IMF).
Faced with the difficult question of whether to stay in the Eurozone, the Greek Prime Minister signed the third bailout package worth €85 billion for 2015-2018. The bailout package ensured Greece's continuation in the Eurozone but required severe austerity measures. However, this decision caused a split in the ruling Syriza party after which the Greek Prime Minister, Alexis Tsipras called for snap polls.
Alexis Tsipras emerged victorious even as he moved his left-wing party towards the centre. Now, the tough task of implementing the austerity measures, which he had once rejected, lies in front of him.
The reforms are targeted at merging Greece's several pension funds, reducing highest pension payouts, increasing contribution and raising taxes on those with high and middle incomes.
Angry trade unions called for a general strike which paralysed the public transportation system. Protests also erupted outside the Parliament where youth threw petrol bombs at the police. Alexis Tsipras, however, said that the reforms are necessary to prevent the collapse of the pension system. According to the agreement with creditors, the government has to cut €5.4 billion in spending by 2018.