Greece’s parliament has passed a second set of reforms, meaning that negotiations on an €86 billion European Union bailout can begin.
The reforms include changes to Greek banking and an overhaul of the judiciary system.
Thousands of protesters demonstrated outside of parliament as the bill was debated, with protests briefly turning violent as petrol bombs were thrown at police.
There had been fears of a rebellion by lawmakers but PM Alexis Tsipras was easily able to muster the support required. In total, the measures received 230 votes in favor and 63 against with five abstentions.
The debate ended at 04:00 local time.
Among those who voted against were 31 members of his own Syriza party. However, this represents a smaller rebellion than in last week’s initial vote.
Former Greek Finance Minister Yanis Varoufakis was one of those rebels in the first vote who returned to vote with the government this time.
Yanis Varoufakis wrote that he felt it was important to preserve the unity of the government, even if he believed the program was “designed to fail” by Greece’s creditors.
Speaking before the vote, Alexis Tsipras stressed that he was not happy with the measures that creditors had imposed.
“We chose a difficult compromise to avert the most extreme plans by the most extreme circles in Europe,” he told parliament.
Representatives of the European institutions that would provide the bailout funds will begin negotiations in Athens on July 24.
Last week, Greece passed an initial set of austerity measures imposed by its creditors. These were a mix of economic reforms and budget cuts demanded by the eurozone countries and institutions before bailout talks could continue.
This second set of measures passed early on Thursday morning were of a more structural nature, including:
a code of civil protection aimed at speeding up court cases
the adoption of an EU directive to bolster banks and protect savers’ deposits of less than €100,000
the introduction of rules that would see bank shareholders and creditors – not taxpayers – cover costs of a failed bank
More contentious measures – phasing out early retirement and tax rises for farmers – have been pushed back to August.
On July 22, the European Central Bank (ECB) increased its cash lifeline to Greek banks.
The emergency injection of an extra €900 million, the ECB’s second in a week, came just hours before the vote.
The International Monetary Fund (IMF) confirmed on July 20 that Greece had cleared its overdue debt repayments of €2.05 billion and was no longer in arrears.
The repayments, which included €4.2 billion to the ECB, were made possible by a short-term EU loan of €7.16 billion.
Greece’s next major deadline is August 20, when it must pay €3.2 billion owed to the ECB, followed by a payment of €1.5 billion to the IMF in September.
The protest in Athens’ Syntagma Square – called by Greece’s public sector union – was reported to have been largely peaceful, until a number of petrol bombs were thrown in the direction of police.
Banks in Greece are reopening after three weeks of closures sparked by the deadlock over the country’s debt.
Greece reached a cash-for-reforms deal aimed at avoiding a debt default and an exit from the eurozone.
However, many restrictions remain, including a block on money transfers abroad, and Greeks also face price rises with an increase in Value Added Tax (VAT).
Meanwhile, Germany has said it is prepared to consider further debt concessions to Greece.
Queues at ATMs have been a feature of life in Greece for weeks, with people waiting in line each day to withdraw a maximum of €60 a day, a restriction imposed amid fears of a run on banks.
From July 20, the daily limit becomes a weekly one, capped at €420, meaning Greeks will not have to queue every day.
While banks throwing open their doors marks the return of some normality to the Greek economy, long-term problems remain.
Unemployment is stubbornly high, and as this chart shows, Greece’s recession is comparable to one of history’s most famous economic crashes.
However, a block on transfers to foreign banks and a ban on cashing cheques remain in place.
Greeks will also pay more on a range of goods and services, including taxis and restaurants, with VAT rising from 13% to 23%.
The rise was among a package of reforms demanded by Greece’s creditors to open talks on the proposed €86 billion bailout.
Members of PM Alexis Tsipras’ party rebelled against the austerity measures demanded by creditors when it was voted through parliament.
It paved the way for Greece to receive a bridging loan, which enables the reopening of the banks and for Athens to repay debts of €4.2 billion, (including €700 million in interest), to the European Central Bank (ECB) due on July 20.
Both Greece and the IMF have been arguing for a restructuring of its €320 billion debt, saying its current position is “unsustainable”.
German Chancellor Angela Merkel ruled out “a classic haircut” – a markdown of Greece’s debts.
She told German television other forms of relief, such as extending maturities or slashing interest rates, could be considered once the details of the latest program are worked out.
Angela Merkel also played down reports of a row with her Finance Minister Wolfgang Schaeuble, who suggested in an interview with Der Spiegel magazine that he would rather resign than defend something he did not believe in.
“The finance minister will, like me, conduct these negotiations and I can only say that no-one came to me and asked to be relieved,” said Angela Merkel when asked about the suggestion.
Germany, which is the largest contributor to Greek rescue funds, has taken a tough line on Greece.
At one point in the fraught talks over the bailout, Wolfgang Schaeuble suggested Greece could temporarily leave the eurozone while it stabilizes its economy.
PM Alexis Tsipras, who has reshuffled his cabinet to replace rebellious ministers, has another set of reforms to push through parliament on July 22.
The Eurogroup has approved a list of reforms submitted by Greece as a condition for extending its bailout by four months, officials say.
Eurozone finance ministers said they had agreed to begin national procedures – parliamentary votes in several states to give the deal final approval.
The measures offered by Greece include combating tax evasion and reforming the public sector.
However, IMF chief Christine Lagarde said they lacked “clear assurances” in key areas.
Greece’s debt stands at more than €320 billion, and its current €240 billion bailout expires on February 28. Fresh funding will not be released until Greece’s proposals are approved in detail.
The stakes of talks over continued financial aid have been high because of fears of a Greek default that could push it out of the euro, triggering turmoil in the EU.
The main stock market in Athens rose by nearly 10% on February 24, hitting a three-month high.
The Eurogroup said in a statement: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions.”
The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a “valid starting point”.
The agreement had “averted an immediate crisis,” said European Commissioner for Economic Affairs Pierre Moscovici.
“It does not mean we approve those reforms, it means the approach is serious enough for further discussion,” he added.
However, Christine Lagarde expressed reservations about the reform proposals.
“In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens,” Christine Lagarde wrote in a letter to the Eurogroup.
“In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged.”
The IMF, ECB and the Commission make up the “troika” of institutions that have managed financial rescue programs for Greece since 2010.
The four-month bailout extension was agreed on Friday after several rounds of talks, pending Greece’s delivery of its reform proposals.
The deal was widely seen as a climbdown by Greek PM Alexis Tsipras. The newly elected leader of the left-wing Syriza party is trying to balance satisfying the demands of creditors with meeting his pre-election pledges.
Alexis Tsipras’ government wants to clamp down on tax evasion, corruption and inefficiency in order to fund social spending and alleviate what it calls Greece’s “humanitarian crisis”.
ECB head Mario Draghi noted that Greek commitments “differ from existing program commitments in a number of areas”.
He said there would be a need to assess whether measures rejected by Greece were “replaced with measures of equal or better quality”.
Eurogroup chairman Jeroen Dijsselbloem said the Greek government had a right to put its own “stamp” on the bailout program.
“The new government is much more aggressive on taxes and corruption, and these are excellent things,” Jeroen Dijsselbloem told Dutch radio.
“But the Greek government is perhaps too optimistic about the speed with which they can boost tax revenues.”
Greek reform proposals:
Combat tax evasion
Commit not to roll back already introduced privatizations, but review privatizations not yet implemented
Introduce collective bargaining, stopping short of raising the minimum wage immediately
Tackle Greece’s “humanitarian crisis” with housing guarantees and free medical care for the uninsured unemployed, with no overall public spending increase
Reform public sector wages to avoid further wage cuts, without increasing overall wage bill
Achieve pensions savings by consolidating funds and eliminating incentives for early retirement – not cutting payments
Reduce the number of ministries from 16 to 10, cutting special advisers and fringe benefits for officials [youtube n6Vg2JqKhUw 650]
The Greek government has submitted a list of reform proposals to its bailout creditors, the European Commission announces.
The list was received “on time”, a spokesman tweeted.
The measures include combating tax evasion and tackling fuel and tobacco smuggling.
PM Alexis Tsipras is trying to balance satisfying the demands of creditors with meeting his pre-election pledges, say correspondents.
Greece needs approval from international creditors to secure a four-month loan extension.
“In the Commission’s view, this list is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review,” a source close to the European Commission told Reuters news agency.
Drafts of the list will have been seen by European officials in Brussels as they were being drawn up over the weekend, but aspects of the plan that require new social spending may well be sticking points with creditors.
Ending home repossessions and providing free medical care and electricity for those who cannot pay may become bones of contention – while the eurozone may insist pension cuts and VAT rises should continue.
The Greek government is preparing to present a list of reforms to lenders in order to secure a bailout extension.
The list to be submitted on February 23 must be approved by international creditors to secure a four-month loan extension.
Analysts say a collapse of the deal would revive fears of a Greek exit from the euro.
Minister of state Nikos Pappas said the list would include measures to tackle tax evasion and streamline the civil service.
German newspaper Bild, citing an unnamed source, reports that Greece aims to recover 7.3 billion euros ($8.3 billion) with measures to combat tax evasion.
A spokesman for the German finance ministry, Martin Jaeger, was quoted as saying by Reuters news agency that Berlin expected the Greek plan to be “coherent and plausible”.
Greece agreed at a meeting with its EI and IMF lenders on February 20 to submit the list of reforms before February 24.
Bild, Germany’s biggest-selling newspaper, was publicly attacked on February 20 by Greek Finance Minister Yanis Varoufakis who remarked about an earlier story: “One must believe @BILD’s tall stories [about Greece] at one’s peril.”
In a new article, the newspaper breaks down what it says is a tax hit list devised by the Greek government.
It will reportedly seek to raise 2.5 billion euros from the fortunes of rich Greeks, 2.5 billion from back taxes owed by individuals and businesses, and 2.3 billion from a crackdown on tobacco and petrol smuggling.
Martin Jaeger said the Greek reform plan, once received, would be examined by Greece’s three creditors – the European Central Bank, the European Commission and the IMF.
Once the three lenders had delivered their opinion, it would be discussed by eurozone finance ministers in a conference call on February 24, he said, according to Reuters.
Yanis Varoufakis has said the bailout agreement will be “dead” if the list of reforms his government is drafting is not approved.
The new Greek government, led by PM Alexis Tsipras, was elected by promising to reverse austerity.
The four-month extension deal is widely regarded as a major climb-down for PM Alexis Tsipras, who won power vowing to reverse budget cuts.