Greece lawmakers back austerity bill

Clear way for more aid from EU

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.

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.

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.

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.

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.