The package, approved by a 153-128 vote, will deal a fresh blow to an economy whose output has shrunk by more than a fifth since the country's debt crisis began. The government says the cutbacks will contribute to a 4.5 per cent contraction next year, but many economists argue the damage could be much greater.
Wednesday's measures are part of a deal struck between the Greek government and a troika of international creditors, and their passage is a critical step towards unlocking a long-delayed and desperately needed cash infusion of €31.5 billion ($40.2 billion).
Before the vote, Prime Minister Antonis Samaras admonished Parliament, saying Greece had no choice but to approve the conditions the European Commission, International Monetary Fund and European Central Bank demanded in exchange for further help. "We are voting on whether we will continue to maintain our presence in the eurozone", Mr Samaras said, promising that the cutbacks would be the last. "We should not play with our future in Europe."
Despite his call, more than a dozen lawmakers from Mr Samaras's three-party coalition refused to back the measures in the vote just after midnight—a worrying sign for the coalition's future.
Passage of the €13.5 billion austerity package is a critical step, but not the only one needed to secure funding for the cash-strapped government. Greece's parliament must also approve a troika-approved 2013 national budget in a separate vote set for Sunday.
Bigger questions loom. Greece's creditors are arguing among themselves over whether more of the country's massive debt load must be written off for the rescue plan to be successful and over how to bridge a financing gap if Athens gets two extra years to meet its budget targets.
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