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Thursday, August 13, 2015, 18:28

Greek govt defends bailout deal ahead of vote

By Associated Press

Greek govt defends bailout deal ahead of vote

ATHENS, Greece - The Greek government defended its new bailout program as tough but essential to avoid the nation's financial collapse, as it faced a rebellion in parliament ahead of a vote on the deal later in the day.

The draft bill for the three-year rescue package worth about 85 billion euros (US$93 billion) in loans includes harsh spending cuts and tax hikes that Prime Minister Alexis Tsipras has said he has no option but to implement.

His radical left Syriza party won elections in January on promises of repealing similar budget austerity imposed in return for Greece's previous bailouts.

The terms of the new agreement have left Tsipras battling severe dissent from within his party, although the bill is expected to pass with votes from opposition parties. Anti-austerity demonstrations were planned outside parliament for Thursday evening debate.

Lawmakers were debating Thursday at a committee level ahead of a full assembly debate and vote, expected around midnight. The deal then needs the approval of eurozone finance ministers, who are due to meet Friday.

Greece is trying to rush the approval of the deal so that it can get rescue funds in time to make a debt repayment in a week. Without the money, it would default — reviving concerns that it might drop out of the euro, with disastrous economic consequences.

Finance Minister Euclid Tsakalotos said the government has pledged to stick to the creditors' demand of achieving a primary surplus — the budget without taking into account debt servicing — of 3.5 percent of gross domestic product by 2018. Greece will implement most of the savings in 2017 instead of this year and next year.

Tsakalotos said there will be a package of measures in October 2015 that will be implemented in 2017.

Progress on Greece's reforms will be reviewed every three months, he said.

The economy is expected to have taken a severe hit in July, when talks on the bailout collapsed, leading the government to close the banks and stock market for about a month.

In the three months before that happened, however, the economy grew by an unexpectedly sharp 0.8 percent compared with the previous quarter, the national statistics agency estimated Thursday.

After the Greek vote, the bailout deal will also need approval from several other eurozone parliaments, including Germany's, before any funds can be disbursed.

Greece desperately needs funds before Aug. 20, when it faces a large debt repayment to the European Central Bank — stemming from its first bailout — that it cannot afford to repay. It has resisted suggestions of receiving an interim loan to tide it over, insisting it wants to proceed with the full deal.

Greece has long said its mountainous debt of 180 percent of GDP cannot reasonably be repaid and that it needs some form of debt restructuring. The IMF has also insisted Greece must receive debt relief, but some European creditors, notably Germany, are more reluctant.

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