Greece adopts legislation to release rescue loans

Greece adopted the last piece of legislation its international lenders required to release the next batch of rescue loans on Thursday, ending two months of wrangling over unpopular measures to overhaul the economy.

Lawmakers convened during parliamentary summer recess to approve a tax code and put finishing touches to a controversial transfer scheme for civil servants.

The bill’s passage will unlock €5.8bn of funds from the euro area, its national central banks and the International Monetary Fund.

Cash-strapped Athens is expected to start receiving the funds from Monday. They include €2.5bn from the euro zone’s EFSF rescue fund, €1.5bn of bond profit returns from eurozone central banks and another €1.8bn from the IMF. Subject to implementation of further reforms, Athens stands to receive another €1bn in October.

Thursday’s vote resolved the latest negotiation round between Athens and its lenders, which started in early June and stretched to the limit the cohesion of its shaky government.

Prime Minister Antonis Samaras’s abrupt decision in June to shut down state broadcaster ERT to meet public sector dismissal targets caused the departure of a coalition ally, leaving him with a parliamentary majority of five seats.

The country’s reform record has been patchy ever since its EU/IMF bailout started in mid-2010, leading to frequent delays in the disbursement of rescue funds.

The troika of international lenders will return to Athens in the autumn to find out whether the government needs to find further savings to meet its 2015-2016 budget targets.

Setting the stage for a potential clash with lenders, Samaras and his only remaining coalition partner, Socialist leader Evangelos Venizelos, have ruled out further austerity measures.

Opposition to the bailout has intensified as the country goes through its sixth year of recession and unemployment hovers at a record rate of 27%. Bailout money runs out at the end of 2014 and the country is expected to need further relief to make its debt sustainable — even though it has already received about 90% of the €240bn to protect it from a default and possible exit from the euro zone.

* Reuters