Greek Parliament Votes Yes to the Bailout

The Greek Parliament has voted in favor of new austerity measures in a bill that will allow them to receive a third bailout to keep their imploding economy going. Before the vote, early Thursday, a violent protest erupted on the streets of Athens.

The measure was expected to pass even though tensions were, and remain extremely high. Many politicians within the ruling Syriza party opposed the deal with one deputy finance minister, Nadia Valavani, resigning.

On Wednesday, the European Commission published its assessment of the Greece’s request to seek more funds to avoid collapse and further default. They took a different view on their debt and sustainability than the International Monetary Fund (IMF) did but signaled there could be more debt relief.

The European Commission published assessment says that Greece will need extensive debt relief from its Eurozone sovereign creditors. According to the European Commission, Greece’s debt to GDP ratio will be 150 percent by 2022 if Athens enacts economic and policy reforms. However, if they do not choose reforms the debt to GDP will be 176 percent. The IMF’s report says Greece’s debt in 2022 will be 170 percent with reforms and the country will need much higher debt relief than what the Eurozone is proposing.

The Commission said that debt re-profiling was possible. However, there would be no write-offs and only if Greece enacted reforms creditors were demanding. “The concerns could be addressed through a far-reaching and credible reform program, very strong ownership of the Greek authorities for such a program and, after full restoration of the loans agreements, debt-mitigating measures that would be granted only once the commitments to reform from the Greek authorities has been demonstrated,” the published report said.

They go on to say there could be a “substantial” debt re-profile as which includes long loan extensions for new and existing debt “interest deferral” as well as financing “at AAA” rates. However, this would leave “Greece with very high debt-to-GDP levels for an extended period.”

The IMF report says that Europe will need to give Greece a 30 year grace period with regards to paying back its debt. This will include new loans and long maturity extensions to existing and newly granted debt.