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Crucial votes will end talk of Greece exiting euro: PM

Greece's Prime Minister Antonis Samaras attends a news conference at the end of the second session of a two-day European Union leaders summi
Greece's Prime Minister Antonis Samaras attends a news conference at the end of the second session of a two-day European Union leaders summi

By George Georgiopoulos

ATHENS (Reuters) - Talk of Greece exiting the euro will end after critical votes in parliament this week on new austerity measures, labor reforms and the 2013 budget, Greek Prime Minister Antonis Samaras said on Sunday.

The three-party government will submit the package of measures to parliament on Monday and must approve both it and the 2013 budget to receive aid from the IMF and European Union that it needs to avoid bankruptcy.

The junior ruling Democratic Left Party has refused to back the mix of tax hikes, spending reductions worth 13.5 billion euros because they are tied to measures that will cut wages and severance payments and scrap automatic wage hikes.

But Samaras's New Democracy Party and most of the deputies of its coalition Socialist partners are expected to push the package through in a slim majority in a vote expected on Wednesday.

Lawmakers should then approve the 2013 budget in another crucial vote on November 11, leading to the release of 31.5 billion euros in aid funds and putting to rest any talk of Greece exiting the euro, Samaras said.

"As soon as the new measures are passed and we get the critical aid tranche, liquidity will start again to feed businesses and households, uncertainty will end, sentiment will change and the fear of a return to the drachma will disappear," he told New Democracy lawmakers at a party meeting.

"All this (talk of Greece exiting the euro) will end irreversibly."

He added that the package would include the last cuts to wages and pensions - a sore point among Greeks weary of a five-year recession that has ravaged middle-class living standards.

"In the last two years, through cuts in wages, pensions, government spending, the recession and unemployment, we lost 35 percent of our living standard as a country," he said. "If we had exited the euro, we would have lost twice as much."

PROBLEMS REMAIN

On Wednesday, the government narrowly passed a law on privatizations demanded by lenders after several members of the ruling Socialist PASOK party did not back it.

One of the party's deputies subsequently quit to become an independent, cutting the number of PASOK lawmakers, many of whom are bitter over their party's fall to single digits in public opinion polls, to 32.

Five of those remaining have said they may not vote for the package, but even without them, New Democracy and PASOK are expected to muster at least 154 of Parliament's 300 votes.

"We must make it and approve the measures by November 12 so the installment is disbursed at the latest by the end of November," an official from the Finance Ministry said.

Also on Wednesday, the government predicted a worse-than-expected recession in 2013 and said its debt would grow to 192 percent of gross domestic product in 2014, about 10 percentage points higher than earlier forecast.

That has increased the prospect of another round of debt restructuring, a source of conflict between the IMF and Greece's biggest EU creditor Germany.

Both privately say Athens' debt trajectory is unsustainable, but Berlin says any prospect of euro zone states taking another "haircut" on their loans to Greece is unacceptable.

(Writing by Michael Winfrey; Editing by Hugh Lawson)

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