Greece passes final bill to receive bailout
Source: Agencies |
July 1, 2011, Friday
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GREECE bought itself time to deal with its crippling debt crisis yesterday after lawmakers passed the second and final austerity bill essential for the release of crucial bailout funds that will prevent the country from defaulting next month.
The European Union and International Monetary Fund had demanded Parliament pass two bills - an austerity law and a second bill detailing how it will be implemented - by June 30 before they approve a 12 billion euros (US$17.3 billion) installment from the country's 110 billion euros package of rescue loans.
Without the next installment of rescue loans, Greece would have run out of money in mid-July.
Despite the looming threat, many Greeks were angry at yet more austerity.
A 48-hour general strike and outbreaks of violence on the streets of Athens brought much of Greece to a standstill in the run-up to Wednesday's vote on 28 billion euros worth of spending cuts and tax hikes and a 50 billion euros sell-off of state enterprises.
Fears of a Greek default have weighed heavy on global markets - investors have been fretting that a default could trigger a major banking crisis, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.
Concerns of a near-term default have been eased as the money will see Greece through September. That's clearly evident in the performance of global markets in the past couple of days. Athens' main stock market closed another 1.1 percent higher yesterday.
"Greece has bought more time," said economist Vagelis Agapitos. "This time however will start running out rather quickly unless Greece starts to deliver on its promises."
The worst case scenario is that Greece may only have a couple of months to show it is doing so - in September, it will once again have to prove it has implemented all it has promised in order to receive any further funds from last year's bailout package.
One particular point of interest will be what progress it is making on the privatization drive in light of continued union opposition. Few state enterprises are immune from being sold off, from the race track and ports to the state electricity company.
Even if Greece gets through the next hurdle in September, there are still real worries that the country will end up having to restructure its debts - negotiating longer repayment times or giving creditors less than the full amount owed. Many economists believe Greece will ultimately have to default on its debts at some points as the scale of the debt is just too big for a country of only 11 million people to service.
For now though, the Greek government has conceded it is going to need more help and is in talks for a second bailout.
The European Union and International Monetary Fund had demanded Parliament pass two bills - an austerity law and a second bill detailing how it will be implemented - by June 30 before they approve a 12 billion euros (US$17.3 billion) installment from the country's 110 billion euros package of rescue loans.
Without the next installment of rescue loans, Greece would have run out of money in mid-July.
Despite the looming threat, many Greeks were angry at yet more austerity.
A 48-hour general strike and outbreaks of violence on the streets of Athens brought much of Greece to a standstill in the run-up to Wednesday's vote on 28 billion euros worth of spending cuts and tax hikes and a 50 billion euros sell-off of state enterprises.
Fears of a Greek default have weighed heavy on global markets - investors have been fretting that a default could trigger a major banking crisis, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.
Concerns of a near-term default have been eased as the money will see Greece through September. That's clearly evident in the performance of global markets in the past couple of days. Athens' main stock market closed another 1.1 percent higher yesterday.
"Greece has bought more time," said economist Vagelis Agapitos. "This time however will start running out rather quickly unless Greece starts to deliver on its promises."
The worst case scenario is that Greece may only have a couple of months to show it is doing so - in September, it will once again have to prove it has implemented all it has promised in order to receive any further funds from last year's bailout package.
One particular point of interest will be what progress it is making on the privatization drive in light of continued union opposition. Few state enterprises are immune from being sold off, from the race track and ports to the state electricity company.
Even if Greece gets through the next hurdle in September, there are still real worries that the country will end up having to restructure its debts - negotiating longer repayment times or giving creditors less than the full amount owed. Many economists believe Greece will ultimately have to default on its debts at some points as the scale of the debt is just too big for a country of only 11 million people to service.
For now though, the Greek government has conceded it is going to need more help and is in talks for a second bailout.
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