Greece buoyed by some good news

Greece got a triple dose of good news yesterday when creditors agreed to open talks on a third bailout package to give the country an interim loan to cover its debts and to provide more support to its closed banks.

Greece buoyed by some good news

Greece’s fellow states in the 19-country eurozone said they were willing to open talks on a rescue package worth €85bn over three years after Athens approved a series of tax hikes and economic reforms overnight.

The austerity bill triggered a revolt in the governing party and demonstrations in central Athens, one of which turned violent.

Because completing a new rescue deal is expected to take up to four weeks, Greece’s European creditors also agreed on interim financing in the meantime.

European Commission head Jean-Claude Juncker confirmed that an EU-wide bailout fund would give Greece a loan to cover it through mid-August.

Finally, the ECB agreed to increase the amount of emergency credit available to Greek banks by €900m over one week, a first step to helping them reopen.

The banks have been closed since June 29 to prevent a bank run, with Greeks limited to cash withdrawals of €60 per day, and the ECB had not raised the credit it makes available since last month. The extra credit is needed to make up for the constant outflow of money from the banks.

It remained unclear how quickly Greece’s banks could reopen or when they might ease the limits on cash withdrawals. The government must pass a second bill next week, which includes reforms to civil justice procedures.

The requirements are part of a deal reached between prime minister Alexis Tsipras and other eurozone leaders after a marathon summit in Brussels last weekend, under which Greece must implement harsh austerity measures, including tax increases and pension cuts, in return for the start of talks on its third bailout.

Tsipras, elected in January on promises of repealing bailout-related austerity measures, has acknowledged the deal tramples on most of his election pledges, but says he had no other option than to accept the harsh terms offered by lenders to ensure his country’s financial system did not collapse.

“We had a very specific choice: A deal we largely disagreed with, or a chaotic default,” Tsipras told parliament ahead of the post-midnight vote.

Politicians voted 229-64 to implement the bill in a vote that saw dozens of politicians from Tsipras’ own radical left Syriza party dissent and vote against him.

The bill passed with a massive majority thanks to the support of three pro-European opposition parties.

Thirty-eight party politicians defied Tsipras by voting against or abstaining. They included Tsipras’s powerful energy minister, the speaker of parliament, and Yanis Varoufakis, the former finance minister who headed Greece’s bailout strategy until his replacement 10 days ago.

The Moody’s credit ratings agency said the vote meant the country had dodged imminent danger, but that it still faced risks.

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