ATHENS, Greece — Greece’s proposed bailout cleared further key hurdles Friday after German lawmakers overwhelmingly gave their backing to another financial rescue and the European Union said it would release a short-term loan to ensure Athens avoids a debt default.
The developments, along with the Greek parliament’s approval early Thursday of creditor-demanded austerity measures, contributed to a positive initial assessment from Europe’s bailout fund. In a statement, the European Stability Mechanism said it approved a “decision to grant, in principle, stability support to Greece in the form of a loan program.”
Prime Minister Alexis Tsipras, meanwhile, reshuffled his cabinet after a rebellion earlier this week in his party’s ranks over the austerity measures, replacing two ministers who voted against him and changing another eight ministers and deputy ministers.
Though the broad outlines of the Greek bailout were agreed Monday by the eurozone’s 19 leaders, the ESM’s decision formally kick-starts the process by which Greece begins negotiating the details.
The discussions, which are expected to last four weeks, will include economic targets and reforms deemed necessary in return for an anticipated 85 billion euros ($93 billion) over three years.
“This agreement offers a chance to put the Greek economy back on track,” said Jeroen Dijsselbloem, the eurozone’s top official and chair of the ESM board. “It’s not going to be easy. We are certain to encounter problems in the years to come. But I believe we will be able to resolve them.”
In recent weeks the Greek economy, which is around a quarter smaller than it was back in 2008 following a brutal recession, has suffered a number of shocks with the country’s euro future on the line.
The hope now is that the banks, which have been shut for the past three weeks, will reopen soon — possibly as early as Monday — and that the paltry 60-euros a day withdrawal limit at ATMs will be raised.
The first big development Friday was the news that German lawmakers, in the wake of their Austrian counterparts, voted 439-119 in favor of opening detailed discussions on the bailout package. Chancellor Angela Merkel had warned them Greece would face chaos without a deal.
That was followed by confirmation that the 28-country EU will release a loan of 7.16 billion ($7.7 billion) in short-term cash by Monday, when it has a 4.2 billion-euro debt repayment due to the European Central Bank.
