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  • Greek Prime Minister Alexis Tsipras came to power promising to end austerity.

    Greek Prime Minister Alexis Tsipras came to power promising to end austerity. | Photo: AFP

Published 8 May 2016

The unpopular move came after police fired teargas at protesters in Athens.

Greece's parliament on early Monday passed a package of unpopular pension and tax reforms that the country's leftist-led government hopes will persuade official creditors to unlock bailout cash.

Greek Police Fire Teargas at Protesters

The measures aim to ensure Greece will attain savings to meet an agreed 3.5 percent budget surplus target before interest payments in 2018, helping it to regain bond market access and render its debt load sustainable.

The vote was a test of the ruling coalition's cohesion, given its wafer-thin majority of three lawmakers in the 300-seat parliament. All of the coalition's 153 lawmakers voted in favor.

Athens wants to boost tax revenues and slash pension spending to reduce the drain on the budget, hoping impressed creditors will unlock aid. But Germany and the IMF remain deadlocked over the terms of country's bailout plan.

Prime Minister Alexis Tsipras' government drew fire from the political opposition during the debate on grounds the pension cuts and tax hikes will prove recessionary, dealing another blow to a population fatigued by years of austerity.

"Mr. Prime Minister, you promised hope and turned it into despair," said Fofi Gennimata, leader of the opposition PASOK socialists, who see the package as the bill for Tsipras' failed push to roll back austerity in last year's clash with lenders which set back the economy and triggered capital controls.

The package aims to generate savings equal to 3 percent of GDP and contemplates raising income tax for high earners and lowering tax-free thresholds.

It increases a so-called 'solidarity tax' - which goes straight into state coffers - and introduces a national pension of 384 euros a month after 20 years of work, phases out a benefit for poor pensioners and recalculates pensions.

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