Greece's parliament 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 early today.

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 favour.

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.

Tsipras' government was re-elected in September on promises to ease the pain of austerity for the poor and protect pensions after he was forced to sign up to a new bailout in July to keep the country in the euro zone.

"The measures will be a tombstone for growth prospects," said Kyriakos Mitsotakis, leader of the conservative New Democracy party which leads in opinion polls.

Police fired rounds of teargas during protests outside parliament in central Athens before the vote began, the night before a key Eurogroup meeting for Greece.


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.

Finance Minister Euclid Tsakalotos defended the reforms, saying lower pension replacement rates will affect the rich and not the poor. He heads to Brussels on Monday to face a Eurogroup meeting, seeking to conclude a key bailout review.

"Our word is a contract. We have done what we promised and hence the IMF and Germany must provide a solution that is feasible, a solution for the debt that will open a clear horizon for investors," Tsakalotos told lawmakers.

The euro zone's 19 finance ministers will discuss Greece's reform programme and a set of contingency measures it is asked to adopt to ensure it achieves agreed fiscal targets in 2018.

Conclusion of the review will inject more than five billion euros to ease Greece's squeezed finances.

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