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Greece Backs New Law To Receive Bailout Loans

Greece Backs New Law To Receive Bailout Loans

5:04am 30th June 2011
(Updated 10:06am 1st July 2011)

The Greek parliament has passed a second austerity law which was the final hurdle to receive vital bailout loans needed to stop it defaulting on its debt.

Politicians voted to implement a five-year plan of spending cuts and tax rises required under an EU/IMF rescue package.

The law was passed after 155 MPs voted for it compared to 136 against.

On Wednesday, the parliament in Athens narrowly approved the set of debt-reduction measures, while protests raged outside.

The two bills had to be backed by MPs before the EU and IMF approved a 12bn euro (£10.8bn) instalment from the country's 110bn euro (£100bn) package of loans.

Masked protesters took to the streets on Wednesday, hurling rocks and smoke bombs at police and setting fire to buildings.

Some demonstrators sprayed fire extinguishers at police, who responded by throwing rocks.

Although the country's 48-hour strike has officially ended, the violence of the protests and their crippling effect has sparked fears of a widespread public defiance.

The vote for austerity has been welcomed in Brussels as the only option for a Greek economy still on the slide.

Greece needs nearly £4bn of the latest bailout instalment by July 15 to pay its most pressing debts.

Eurozone finance ministers are now likely to clear the latest bailout payment at talks in Brussels on Sunday.

Sky's Europe correspondent Alex Rossi reported that rocks, fireworks, pieces of masonry and petrol bombs were thrown by a "sizeable minority" of protesters in Syntagma Square, outside parliament, on Wednesday.

They were being countered by volleys of tear gas and stun grenades fired by police.

"The smell of tear gas is overpowering," Rossi said.

"I'm surrounded by people huddled in corners, washing their eyes with water, choking, and gasping."

Tens of thousands of Greeks had taken to the streets since early on Tuesday, as a mark of protest against what they see as unreasonable demands from the EU and IMF.

If the politicians had not approved the plan, Greece would have been pushed to the brink of defaulting on its debts.

But even though the government has won backing for its plan, the nation's problems are far from over.

Although it can now receive the next instalment of its EU/IMF bailout, Greece still has crippling public-sector debts worth 150% of its GDP.

The austerity measures, which include public sector wages cuts and increased taxes, may help limit further borrowing - but also risk strangling economic growth.

The new austerity package voted through on Wednesday was hailed as a "vote of national responsibility" by European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.

In a joint statement they said: "With approval by the Greek parliament of the revised economic programme, the country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform. 

"But it has also taken a vital step back - from the very grave scenario of default."

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