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Greek MPs back key cuts proposal

Greece has bought itself time to deal with its crippling debt after MPs passed the final austerity Bill essential for the release of crucial bailout funds.

The European Union and International Monetary Fund had demanded Parliament pass two Bills - an austerity law and a second Bill detailing how it will be implemented - by June 30 before they approve a 12 billion euro (£10.4 billion) instalment from the country's 110 billion euro (£96 billion) package of rescue loans.

Without the next instalment of rescue loans, Greece was to run out of money in mid-July.

Despite that overhanging threat, many Greeks are angry at yet more austerity. A 48-hour general strike and outbreaks of violence on the streets of Athens brought much of Greece to a standstill in the run-up to Wednesday's vote on 28 billion euro (£24 billion) worth of spending cuts and tax hikes and a 50 billion euro (£44 billion) privatisation programme.

Fears of a Greek default have weighed heavy on global markets in recent weeks - investors have been fretting that a default could trigger a major banking crisis and turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

Concerns of a near-term default have been eased as the money will see Greece through to September. That is clearly evident in the performance of global markets in the past couple of days. Athens's main stock market closed another 1.1 % higher.

"Greece has bought more time," said economist Vagelis Agapitos. "This time however will start running out rather quickly unless Greece starts to deliver on its promises."

The worst-case scenario is that Greece may only have a couple of months to show it is doing so - in September, it will once again have to prove it has implemented all it has promised to receive any further funds from last year's bailout package.

For now though, the Greek government has conceded it is going to need more help and is in talks for a second bailout. Last year's 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.

As well as rubber-stamping the release of the next batch of bailout funds, finance ministers from the eurozone are expected to discuss the terms of a second bailout at their meeting on Sunday in Brussels. The IMF is also expected to clear the immediate funds next week.

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