Greece has bought itself some time to deal with its crippling debt crisis after lawmakers cleared the final hurdle for crucial bailout funds to be released that will prevent the country from defaulting next month.
The EU and IMF had demanded parliament pass two bills — an austerity law and a second bill detailing how it will be implemented — before they approve a 12 billion euros (US$17.3 billion) installment from the country’s 110 billion euro package of rescue loans.
Parliament passed the second law by majority vote yesterday.
Yesterday’s vote was to determine the details of the 28.4 billion euros to be slashed from the Greek government’s budget through to 2015.
As city workers and store owners pursued a mammoth clean-up job on the streets around the parliament’s Syntagma Square home, Greek Finance Minister Evangelos Venizelos warned that even if the second vote passed the government faced further fights.
The austerity plan — echoed in budgetary rewrites in Britain, Italy and fellow bailout recipient Portugal — is designed to do two things:
First, to unlock 12 billion euros in emergency funds to beat this month’s deadline and avoid bankruptcy; and then to pave the way for a second international bailout of a similar magnitude to last year’s 110 billion euro rescue.
“I am convinced it will be possible to take the decision on the next payment,” Belgian Finance Minister Didier Reynders said in Paris yesterday after “a first good answer from Greece.”
The volume to be contributed by private banks has caused a ruckus among EU partners, and Reynders said that would likely need to wait until July 11 talks for more clarity.
However, Venizelos raised a further problem, saying “countries like Finland,” a gold-plated eurozone economy influential in Brussels, also want Athens to put up collateral.
“Things are not straightforward; we need to send a clear message on the participation of private banks,” Venizelos said late in the pre-voting debate.
“We also have to cross hurdles put up by certain [EU] member states, and not the biggest ... like Finland, which wants guarantees over and above those compatible” for Athens with EU rules of solidarity, he added.
Greeks fear real estate or even islands being sought as collateral for government finance.
Annual budget votes will be required to drive through implementation that protesters say will only produce more slippage unless the Greek government is replaced.
A yes vote was “the only way to buy time and start the great changes this country needs,” , after Greek Prime Minister George Papandreou said on Wednesday, pledging to do “everything to avoid the collapse of this country.”
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