Greek parliament approves reforms for bailout funds

Greek parliamentarians have approved a set of extra measures demanded by international lenders for the country to receive further bailout funds and cheap bank funding from the European Central Bank.

Athens and its creditors - the European Commission, the ECB, the European Stability Mechanism fund and the International Monetary Fund - wrapped up most of the reforms needed for the release of bailout cash last week.

But to secure a tranche of €7.5 billion, Greece was required to tie up some loose ends of its bailout programme.

"Today we are concluding the first part of our government's narrative, which was the bank recapitalisation, the conclusion of the first bailout review and the debt deal," finance minister Euclid Tsakalotos said before the vote.

After a week of talks, mainly caused by Greek resistance to having to implement the unpopular reforms, some issues have been postponed to September. Thursday’s vote covered the rest.

The reforms which were approved included phasing out an income-based benefit for pensioners by 2020, starting this month, and selling a 20-24 per cent stake in the power-grid operator ADMIE by the end of October.

Compromises have also been reached on a proposal to limit seniority-based wages for police and the coast guard - as Greece struggles with Europe’s worst migrant crisis in decades - and the sale of non-performing loans guaranteed by the state, a step demanded by the ECB.

Expectations

The government, which has a narrow majority of 153 MPs in the 300-seat parliament, hopes the approval of the measures will quell concerns about Greece’s fiscal progress, open the way for debt relief and help its banks regain access to cheap ECB borrowing.

Despite Greek banks’ expectations, the ECB’s decision-making body did not restore their access to cheap funding on Thursday, after the delays in talks between the Greek government and its creditors.

ECB president Mario Draghi said the issue would be discussed after it had been ascertained that Athens had adopted agreed "prior actions", adding this would require another meeting.

Deputy euro zone finance ministers will assess Greece’s bailout progress next week.

Prime minister Alexis Tsipras held a cabinet meeting before the vote to discuss Greece's progress and said he expected the ECB would reinstate the waiver allowing it to accept Greek debt as collateral "immediately after the official conclusion of the bailout review".

‘Possibly in July’

He also said he hoped Greece could take part in the ECB’s quantitative easing programme (QE) “possibly in July”.

“These two developments will really signal a liquidity boost, which the economy needs,” he said.

In Brussels, Eurogroup president Jeroen Dijsselbloem said Greece was meeting its bailout obligations and euro zone finance ministers were ready to deal with its debt issue.

“The confidence in the Greek government has changed, they have delivered, taken a lot of difficult measures and are still doing so and on that basis we are prepared to take the debt issue seriously,” he told reporters.

Reuters