Greek parliament passes 2nd austerity bill

Greek legislators have passed a bill to fast-track fresh austerity measures demanded by international creditors, following two days of rioting in Athens that left some 200 people injured.

The European Union and International Monetary Fund have insisted that Greece back a five-year austerity package in return for making more money available to prevent a default on its debts next month.

This second austerity bill spells out how the plan will be implemented.

On Wednesday, the Greek parliament approved the five-year, €28-billion ($40-billion) package of spending cuts and tax increases, leaving details of the cuts to be approved Thursday.

Now that the latest austerity measures are approved, the eurozone and the International Monetary Fund are in a position to release the €12 billion ($17 billion) that is due from last year's package of rescue loans for Greece.

Without the financial assistance, Greece was facing bankruptcy as soon as the middle of July. A Greek default on its debts could trigger a major banking crisis and potential turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

As a result, markets around the world breathed a sigh of relief after Wednesday's vote and continued to make gains on Thursday.

The €12 billion will tide Greece over until mid-September, according to government officials, but it looks like it will need a lot more money in the years to come. Creditors are considering giving Greece a second, major support package to cover upcoming financing gaps.

Last year's €110-billion ($159-billion) package was predicated on Greece being able to tap bond market investors for cash next year but with the country's interest rates at exorbitant levels, that looks highly unlikely.

Although stock markets in Europe and New York have seen gains in response to the austerity plan, with banks among the top performers, the measures have met with resistance on the streets of Greece.

On Wednesday, riots erupted for a second day outside the parliament in Athens, with police clashing and firing tear gas at protesters after a failed attempt to blockade the building.

The violence left more than 50 stores damaged. There was heavy security outside the parliament buildings in Athens on Thursday as legislators debated the austerity plan.

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Source: CBC  news