Greece aid faces delay as stiff austerity measures pass

Greece’s euro partners won’t be able to release the country’s next batch of bailout cash at a meeting next week, even though the Greek parliament narrowly backed more unpopular austerity measures.

Germany’s finance minister Wolfgang Schäuble said the 17-country eurozone is not yet in a position to make a decision on releasing the funds, as many in Athens may have hoped. As anticipated, the cash-strapped country still has to pass its budget for 2013 while politicians in some countries, including Germany, have to authorise the release of funds.

“We’re not there yet,” Schäuble said in Hamburg.

“I don’t see how we would get to a decision next week,” he said, referring to the meeting of the eurozone finance ministers on Monday. “Not all is lost, but not all is won.”

The approval of the austerity bill, which will further cut salaries and pensions and increase taxes, was the key step towards persuading Greece’s international creditors to release the next €31.5bn installment of the country’s vital bailout loans.

Without it, the government has said the country will start running out of cash next Friday, Nov 16, paving the way to Greece’s potential bankruptcy and exit from the euro. That scenario has kept financial markets on edge for the past three years.

However, Germany, the biggest single contributor to Europe’s bailouts, has insisted Greece must first pass its 2013 budget to create the basis on which the country’s creditors can make a decision to release the new funds.

After the budget vote, which is scheduled for Sunday, the release of the funds still hinges on a report by the troika of debt inspectors from the EU, IMF, and ECB. Though favourable to Greece, it is not expected to be ready in time for the Monday meeting.

In addition, some euro countries such as Germany can only give the go-ahead after their own parliaments have voted on it. Though those votes are not expected to take much time, they add the prospect of further delay.

Greek politicians yesterday voted 153-128 for the package, hours after more than 80,000 protesters demonstrated outside in Athens — some fighting running battles with riot police.