<p>Prime Minister George Papandreou secured a majority for the legislation after lawmakers backed a 28 billion five-year euro austerity plan, clearing the last obstacle to the next slice of aid from the European Union and the International Monetary Fund.<br /><br />The euro and global stocks rose to three-week highs in anticipation of the vote as investors expressed relief that the specter of a sudden summer default had been avoided, despite fierce public opposition to more pay and spending cuts.<br /><br />Belgian Finance Minister Didier Reynders said euro zone finance ministers were likely to agree as a result to release a next tranche of loans to Greece at a meeting on Sunday. The IMF is set to follow suit on July 5.<br /><br />That 12 billion euro loan will prevent Greece defaulting in mid-July or at the latest on August 20, when it must honor a big bond redemption, and shift the focus to a second assistance package likely to be about the same size as last year’s 110 billion euro bailout.<br /><br />But credit insurance markets are still pricing in an 80 percent chance of Greece defaulting on its 340 billion euro debt mountain — 150 per cent of annual economic output — within five years, and a likely 40 per cent write-down for bondholders on three-year debt.<br /></p>
<p>Prime Minister George Papandreou secured a majority for the legislation after lawmakers backed a 28 billion five-year euro austerity plan, clearing the last obstacle to the next slice of aid from the European Union and the International Monetary Fund.<br /><br />The euro and global stocks rose to three-week highs in anticipation of the vote as investors expressed relief that the specter of a sudden summer default had been avoided, despite fierce public opposition to more pay and spending cuts.<br /><br />Belgian Finance Minister Didier Reynders said euro zone finance ministers were likely to agree as a result to release a next tranche of loans to Greece at a meeting on Sunday. The IMF is set to follow suit on July 5.<br /><br />That 12 billion euro loan will prevent Greece defaulting in mid-July or at the latest on August 20, when it must honor a big bond redemption, and shift the focus to a second assistance package likely to be about the same size as last year’s 110 billion euro bailout.<br /><br />But credit insurance markets are still pricing in an 80 percent chance of Greece defaulting on its 340 billion euro debt mountain — 150 per cent of annual economic output — within five years, and a likely 40 per cent write-down for bondholders on three-year debt.<br /></p>