Austerity bill passing a lifeline for Greece: EU's Barroso

The European Union and the IMF have shown increasing frustration over Greece's inability to tackle its burgeoning debt. After weeks of haggling over the terms of a 130 billion euro bailout, the Greek Parliament accepted tough austerity measures today, albeit amid violent protests in the country.

This acceptance, however, has eurozone finance ministers also pushing for Greece to set more conditions to secure a second bailout needed to ensure it can meet its debt repayments on March 20.

Jose Manuel Barroso, president, EU Commission tells CNBC-TV18's Shereen Bhan that he agrees the austerity measures imposed on the Greek people will be painful to pursue. But he says the country now has to make some kind of difficult adjustment programme due to its unsustainable level of debt.

Below is an edited transcript. Watch the accompanying video for more.

Q: The Greek Austerity Bill has finally gone through amidst violence, amidst protests in the country. Do you believe that the threat of a disorderly default is behind us or do you believe that this is a temporary reprieve?

A: No, I think it is a solution for Greece. Now the Euro group of ministers finalize the agreement because there are still some conditions and steps that need to be clarified, but it was certainly very good news that the parliament of Greece endorsed the new programme. The alternative would have been chaos and catastrophe as the Prime Minister of Greece said. So a disorderly default of Greece would have been chaos for the Greek people and a catastrophe with consequences that we can not even estimate.

We know that's it's a painful and a very difficult programme to pursue, but we have to understand why we are here. We are here because that country reached an unsustainable level of debt. So it now has to make some kind of difficult adjustment programme. But I believe that now we are very close to a conclusion and I hope that there will be agreement among the euro area on the new programme for Greece that will give of course a sustainable future for Greece. This is also good news for the euro area.

Q: Do you believe that the additional conditions, which is another USD 325 million in terms of budget savings etc that would seal the deal? Will that satisfy the eurozone finance ministers to go through with this programme?

A: I hope so because it's difficult to ask for more in the present circumstances from the Greek citizens. That was the agreement, by the troika, i.e. the European commission, the International Monetary Fund (IMF) and the European Central Bank (ECB). So, there was a tough technical level, a clear consensus on the terms for getting Greece's debt to a sustainable path. So I hope now with some conditions that are still to be clarified there will be agreement of the euro area to this programme.

Q: The Greek prime minister Lucas Papademos said - 'The full timely and effective implementation of the programme is not going to be easier'. A lot of question marks are now being raised on the connection would the elections in April and whether if the social explosion that we are currently seeing in Greece continues, how that is going to impact this programme?

A: I cannot deliberate now, what about if and if. The reality is that against many of the negatives and the pessimisms, the Greek parliament that represents the Greek people endorsed this programme. Now it's about implementing the programme. Of course, we are making the agreement on the basis of good faith that all parties fulfill their commitments whether this was with Greece or with any other country.

So I hope this will be implemented because that is the target and that is the way it should be because people have to think about the alternative and what is the alternative? The alternative is to not have enough pay to pay schools, to pay hospitals, to pay the functioning of the state. So of course this programme is difficult but the alternative would have been much worse.

Q: How do you respond to the criticism that there isn't enough emphasis or focus on stimulating growth? The emphasis is only on austerity as far as Europe is concerned?

A: As far as Europe is concerned this is not true, we are concerned with growth. Of course there is some immediate measures for fiscal adjustment because some of our member states were clearly living above their means and so there is no miracle when you spend too much, afterwards you have to reduce to come back to a sustainable path. So, there is some fiscal adjustment, but we are investing on growth through structural reforms.

Indeed, many of our governments are making extremely difficult reforms to make our markets more flexible, to make Europe more competitive. They are taking painful measures that were considered impossible one or two years ago and this is the best way to growth now. Let's put it frankly, most of our member states, they have no fiscal space for a fiscal stimulus to growth. That cannot work and will be a disaster.

If you go back to the idea that now pumping money through budgets will solve the problem, it will be a disaster because it will in fact increase the distrust of some operators in the markets regarding Europe. So, we have to combine some short-term measures for fiscal adjustment with medium-to-long-term structural reforms, opening markets in Europe and to the rest of the world.

This is the way for growth but as I have said very often, it's not a sprint it's a marathon. It takes time to adapt to the new circumstances, but I am happy to say that all our governments in Europe are now very aware of these challenges and are taking decisions that are very courageous.