German Parliament Approves Greece Bailout

(RTTNews) - German lawmakers approved a third bailout of EUR 86 billion for Greece on Wednesday, which is likely to be finalized by Eurozone finance ministers later in the day, just in time to release funds to the latter to honor a payment to the European Central Bank due on August 20.

In the lower house, Bundestag, 454 members voted in favor and 113 rejected the bailout, while 18 abstained from the process.

A bitter debate on the Greek deal is underway in the Dutch parliament, but lawmakers are expected to back the bailout.

The three-year bailout for Greece was approved by Eurozone finance ministers last Friday. Athens has to pay EUR 3.2 billion to the ECB tomorrow.

Elsewhere, the Board of Governors of the European Stability Mechanism, who are the euro area finance ministers, are expected to hold a teleconference Wednesday night at 19 hours Brussels time, to decide on the bailout program for Greece.

Grexit risks have not disappeared and are likely to flare up in the autumn when Greece fails to pass its first review and secure crucial debt restructuring, Jennifer McKeown, a senior European economics at Capital Economics, observed. She still sees Greece leaving the Eurozone in the next twelve months.

Carsten Brzeski, an ING Bank NV economist said the German government will continue having a hard time, even after today's vote. It is the role of the International Monetary Fund in the third Greek bailout package.

Brzeski noted that a face-saving compromise could be that initially IMF participation would be limited to technical assistance, monitoring and surveillance of the Greek reforms.

Later, probably in October after a first successful assessment of the Greek measures and their implementation, the Eurogroup could decide on debt relief measures and then bring the IMF on board with additional financial assistance, the economist said.

Fitch Ratings upgraded Greece's sovereign ratings by one notch to 'CCC', saying that the agreement reached between Greece and the European institutions last week on the framework for a third bailout has reduced the risk of Greece defaulting.