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Tsipras to move quickly on reforms
September 25, 2015, 1:46 pm

Tsipras, who was in Brussels this week to discuss the refugee crisis, now has the popular mandate to execute reforms in the Greek economy [Xinhua]

Tsipras, who was in Brussels this week to discuss the refugee crisis, now has the popular mandate to execute reforms in the Greek economy [Xinhua]

Fresh from a significant election win for his beleaguered party, Greek Prime Minister Alexis Tsipras told the first meeting of his new cabinet on Friday that he would move swiftly to implement economic reforms required by European lenders as part of a financial bailout.

He also said that he would seek debt relief from European creditors once the reforms are approved.

Tsipras’ Syriza party won 145 of 300 seats in Parliament after a snap election on Sunday in which the prime minister won 35 per cent of the vote.

The election results provide Tsipras not only with the popular mandate he has been seeking but also a solid confidence boost for his policies.

Tsipras resigned on August 20 and called for the September 20 election after 30 MPs from his party walked out of a parliament vote on European Union austerity measures ahead of an agreement on a debt bailout package.

The walkout stripped Tsipras of his majority in the Greek Parliament; he said he felt he no longer had the mandate of the people who voted the leftist Syriza into power last January.

In the end, Tsipras did manage to get parliament to ratify the bailout deal, but only by reaching out to the political opposition.

The walkout MPs, who since formed their own splinter party called Laiki Enotita (Popular Unity), led by former energy minister Panagiotis Lafazanis, performed poorly in the September 20 elections.

Tsipras has several objectives, foremost of which is to convince European creditors that Greece is on track to reform and revitalize its economy.

The bailout package offered by Europe is for 86 billion euros ($95 billion) but hinges on Athens successfully implementing a number of strict austerity measures including slashing defense and agriculture subsidies, reforming the pensions regimen, increasing privatization, raising taxes, removing value-added-tax discounts, and increasing deregulation.

One of Tsipras’ greatest challenges is to secure means to recapitalize the banking sector, which makes up 20 per cent of the Greek Stock Market ATG.

As the Grexit crisis peaked in June and July, Greeks withdrew billions of dollars from their accounts, forcing a 60-euro daily limit on withdrawals.

EU experts estimate that the banking sector needs a minimum of $10 billion – or as much as $25 billion – in recapitalization.

Some $25 billion of the $95-billion bailout package has been allocated to the recapitalization of banks.

The BRICS Post with inputs from Agencies

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