ATHENS (BLOOMBERG) - Greek legislators approved a bailout package on Friday (Aug 14) that may unlock as much as 86 billion euros (S$129 billion) and help the nation avoid a default next week when it has to make a payment to the European Central Bank.
After an all-night debate in Athens, Prime Minister Alexis Tsipras secured the backing of more than 151 lawmakers in the 300-seat parliament in a vote on Friday morning. The rescue deal approved includes sweeping economic reforms and budget cuts mandated by Greece's creditor institutions.
Euro-area finance ministers will gather in Brussels later on Friday discuss political backing for the deal, which was struck this week between the Greek government and negotiators from the ECB, the European Commission, the International Monetary Fund and the European Stability Mechanism rescue fund.
The institutions witnessed "very good cooperation" with Greek authorities during a recent visit to Athens to put the new package together, according to an EU-ECB statement issued Friday morning. The IMF, in a separate statement, said it will work with authorities "to develop their program in more detail and for Greece's European partners to make decisions on debt relief that will allow Greece's debt to become sustainable."
The bailout package, Greece's third since 2010, spells out the details of the economic overhaul the government committed to in exchange for the loans. Measures include a clampdown on early retirement, state asset sales, the recapitalization of Greece's banks and changes to the regulation of bakeries and pharmacies.
Greek Prime Minister Alexis Tsipras told lawmakers that the deal, while difficult, was the best that could be done to keep the country in the euro.
The European institutions involved in putting together the agreement voiced "serious concerns" about Greece's ability to repay its debt. Greece's obligations will peak at 201 per cent of gross domestic product next year, before dropping to 160 per cent in 2022 under a new rescue program, according to their projections in a document obtained by Bloomberg.
"Interest rates need to be as low as possible, maturities have to be as long as possible - these things have to be re- managed to provide oxygen to the Greek economy," French Finance Minister Michel Sapin said on France Inter radio on Friday as voting got underway. Greek debt will be discussed in October, he said.
Any delay in signing off on the deal risks derailing the narrow timetable for national parliaments in other euro-area countries to vote on the three-year package before a 3.2 billion-euro payment to the ECB falls due on Aug. 20. Germany's government has said the plan needs more work and that a bridge loan remains an option to meet the ECB repayment.
That would be a setback for Mr Tsipras, who needed to rely on votes from opposition parties to approve the deal with creditors. Lawmakers from the so-called Left Platform of his party refuse to support the continuation of austerity, accusing him of betraying his pledges and the Greek people's mandate.
Former Energy Minister Panagiotis Lafazanis, who leads the Left Platform within Syriza, announced the creation of an anti-bailout movement on the platform-affiliated website Iskra.gr on Thursday. Mr Tsipras, whose majority fell by at least 30 lawmakers during the last two parliamentary votes in July, has called for a special party congress in September, to resolve the divisions within his party with the prospect of early elections looming.