Italian PM Mario Monti’s austerity drive gets lower house approval

Prime Minister of Italy, Mario Monti’s austerity plan cruised to victory in the Chamber of Deputies’ confidence vote on Friday. The overwhelming victory of 495 to 88 in the lower house is expected to increase Italy’s chance in receiving bailout package amounting to € 33-billion or $43 billion. Mario Monti still has to get the final approval of the Senate (upper house of the parliament) next week for the smooth passage of austerity package.

Italy’s ‘Super Monti’ is currently under immense pressure from leaders of Europe to put a cap on spending and generate funds to boost Italian economy. Once the austerity bill is passed by both houses of parliament, Mario plans to implement a series of measures to address Italy’s huge debt crisis and balance 2013 budget through increased tax and pension reforms. Some of the immediate steps government of Italy is likely to take are - reintroducing ‘tax on first homes’ (earlier abolished by the previous Berlusconi government), hiking real estate tax and also some growth incentives.

Though Italian Premier’s austerity plan enjoys parliamentary consensus, many in the main opposition parties are skeptical that the proposed measures might be unfair on the poor in society. They are going to be the hardest hit of the austerity cut.

Papandreou secures the confidence vote

With the win of confidence vote on Saturday, the Prime Minister of Greece has tackled a crucial political crisis in the recent time. The victory stamps the official approval of the Greece parliament on the debt agreement reached with EU leaders last week. The win though came by a narrow margin, 153 to 145, is going to pave the way for the EU to sanction bail out package for Greece, needed to manage the current debt crisis. Saturday’s victory means, Greece is going to receive 8 billion Euros as relief installment from EU and IMF next month. This is expected to allow Greece to pay its next month’s bill and avoid immediate default.

As per the Greece bail out package, The EU along with IMF would finance a total of approximately 109 billion Euros in Greece debt. Major private sector banks in Europe has voluntarily agreed to contribute another 37 billion Euros. In exchange, Greece is expected to cut down on government jobs, reduce pensions and encourage privatization.

The vote ends a jittery week that started with Papandreou’s announcement of holding an election on Greece’s debt agreement. He was then forced into a humiliating climb-down not only by the EU leaders but also by the members of his own Socialist party, Pasok.

Also on Saturday, the Greece Prime Minister has called on the Greece President, Karolos Papoulias, to ask for his permission to help form a coalition government. He has expressed urgency to break through the controversial Greece rescue package. George Papandreou has also voiced his intention to step down to make way for the coalition government.