Greece’s future hung in the balance on Sunday as Parliament opened debate on new austerity measures to avoid default after the Prime Minister warned the nation was approaching “Ground Zero.”
Parliament president opened the crucial session during which MPs will decide whether to back a government-approved plan that is needed to unlock a €130-billion ($171 billion) rescue fund from the European Union (EU) and the International Monetary Fund (IMF).
“We are a breath away from Ground Zero,” Lucas Papademos said in a televised address on the eve of the vote, urging deputies to grasp their “historic responsibility” to secure its financial future.
Papademos warned of “economic and social catastrophe” if Parliament failed to agree to the deeply unpopular cuts needed to get the international funds and avoid default in March.
MPs will have to approve moves to recapitalise Greek banks, which may involve a degree of nationalisation if they cannot get sufficient private money. They must back a bond swap with private creditors.
That is designed to wipe out around €100 billion from Greece’s €350-billion debt, reducing Greece’s massive debt burden to 120% of GDP.
If deputies reject the package however, Greece will not get the money it needs to stave off bankruptcy on March 20, when it has to repay nearly €14.5 billion in maturing debt.