Parliament held its third and final day of debate Wednesday to approve next year's budget, which the government says complies with demands set out by bailout creditors who are due most of the country’s massive national debt.
Low income families are set to benefit most from the additional money on offer for allowances, including for winter fuel payments. After eight years of relying on bailout funds mainly from its partners in what is now the 19-country eurozone, Greece exited its rescue program more than a year ago. However, it remains under strict supervision from lenders and has committed to achieving fairly stringent budget targets through 2022.
However, the conservative government of Prime Minister Kyriakos Mitsotakis, elected five months ago, says it can justify the one-off payments as a result of the country’s better than anticipated fiscal performance.
His government is pencilling in growth of 2.8% for next year, which is considerably higher than estimates made by the European Union's executive Commission and the International Monetary Fund. Greece's creditors, which also includes the IMF, control the terms of the country's debt repayments. Despite years of budget restraint, Greece's debt mountain still stands at around 180% of its annual GDP. However, repayment is a more sustainable proposition given that the interest rates being charged by international bond markets have fallen dramatically this year.
The left-wing Syriza opposition, which lost power in July, argues that budget savings should be used in to rebuild social and welfare services which were underfunded during the crisis as unemployment and poverty rates rose sharply. But the government says its priority is to fund growth-friendly measures and continue cutting taxes to allow the recovery to gather pace.