Greek Spending Cuts Clear Way for Loans

01 July 2011

Riot police and demonstrators clash Tuesday during protests against austerity measures in Athens

Updated

This is the VOA Special English Economics Report.

Greece has approved a plan to raise taxes, cut spending and sell government-owned assets. This clears the way for seventeen billion dollars in loans from the International Monetary Fund and the European Union. The loans are a share of the one-hundred-fifty-six-billion-dollar rescue deal that Greece secured last year.

The money will help the government to operate and pay its debts until the middle of September. But the austerity plan led to a national strike on Tuesday and Wednesday, along with violent demonstrations in Athens.

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Several hundred protesters and police were injured.

The Greek parliament approved the forty-billion-dollar plan on Wednesday and the details on Thursday. Prime Minister George Papandreou won more support than expected for his proposals. He appealed to parliament to do everything possible to avoid defaulting on the debts of the birthplace of democracy.

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"There is a choice," he said. "We can remain a Greece which has a huge public sector, or change to a Greece which has an effective democratic and productive public sector."

Greece is expected to seek more international help, even though years of government borrowing led to the crisis.