Greek austerity budget approved by parliament

A Greek austerity budget setting out tough deficit goals passed through parliament early Wednesday as European leaders came under mounting pressure to tame the eurozone's burgeoning debt crisis. An outright majority of socialists, conservatives and far-right nationalists backing Greece's interim government approved the budget which commits to unpopular cutbacks demanded by EU partners in return for fresh loans. Of the 299 deputies present, 258 voted in favour and 41 against, parliament speaker Philippos Petsalnikos said. Caretaker Prime Minister Lucas Papademos had earlier urged lawmakers to vote for the economic blueprint, which he said would begin to reverse disastrous policies that had saddled each Greek with a debt of over 30,000 euros ($40,000). After years of accumulated deficits, Greece's sovereign debt currently stands at over 350 billion euros. "Our actions will determine the country's economic future, not only for 2012 but for the entire decade," said Papademos, who took over last month with the task of ratifying a key eurozone debt deal and holding early elections. The PM, a former European Central Bank deputy chief, also insisted that Greece's position in the European Union and the euro was "non-negotiable". "Our place in Europe is non-negotiable. The Greek people will defend it in every way possible," Papademos said. "Europe and our common currency remain, despite the crisis, one of the noblest achievements of recent history," he said. Clashes had broken out outside parliament before the vote as thousands joined demonstrations to honour a schoolboy fatally shot by police three years ago. That incident in December 2008 had sparked youth riots in several Greek cities as the country entered a recession from which it has yet to emerge. Papademos said the 2012 budget forecasts a state revenue increase of 4.5 billion euros and spending cuts of around five billion euros. The additional income is to come from a tax system overhaul coming in January that will drastically reduce tax breaks and modify income thresholds to broaden the taxpayer base. Reforms in the health sector, social security, job flexibility and justice will also be carried out next year, Papademos said. And a delayed state asset sale would proceed "at a faster pace," the PM said, adding that the aim would be not only to maximise earnings but also to improve the management of organisations to be privatised. Papademos concluded that should all go well, Greece could expect a primary surplus of 2.2 billion euros for the first time in years. "It will take the hard work and determination of more governments, but the decade we are in can ultimately become a decade gained," said the PM, who is expected to call snap elections early next year. The conservative party, one of his main backers, reiterated on Tuesday that elections would be held in February, a position contested by the other parties in the coalition who say the temporary government should be allowed to complete its mission without time constraints.