International Monetary Fund calls for Greek debt relief after bailout approval

Some national parliaments, including Germany, still must approve the deal.

The Washington-based International Monetary Fund, which has lent to Greece itself and played a role in supervising the implementation of two previous bailouts worth a total of 240 billion euros, has urged the other 18 states of the euro zone to give Athens debt relief in order to help revive its crippled economy.

Greece’s third bailout is back in the hands of euro zone finance ministers, who are meeting Friday to discuss whether to go ahead with the deal-or delay it.

Germany, Greece’s most influential creditor and harshest critic, was cautiously optimistic.

“I am actually quite optimistic that we shall reach a result today, the preparations have advanced pretty well”, Wolfgang Schaeuble said.

Ten billion euros will be made available to recapitalize Greece banks, while a second slice of 16 billion euros will be paid in several installments, the wire service said.

“While an early election could be helpful in terms of removing hardliners from a Tsipras-led Syriza and, possibly, forcing the party to adopt a more centrist stance, the most likely outcome will be another fragmented parliament in which no party controls an absolute majority”, said Wolfgango Piccoli, an analyst at Teneo Intelligence. The stock market in Athens slid on the news and was down 2.4 per cent in afternoon trading.

Tsipras has long argued Greece can not repay all its debts and demanded a partial write-off.

Thanks to opposition support, Mr Tsipras easily managed to cross the 151-vote threshold in the 300-seat chamber to pass the bill. An election would allow him to remove the hard line elements from his party, but it is not a risk-free option.

The BBC’s Adam Fleming in Brussels says the finance ministers also confirmed that the thorny issue of writing off some of the Greece’s debts would be considered in the autumn.

“However, it appears to be unavoidable if Greece is to have a government capable of implementing the agreement“. Some nations, such as Finland, have already given their approval.

Lawmaker Panagiotis Lafazanis speaks during a parliamentary session…

He and 12 other left-wing politicians are intending to start a rival anti-austerity movement to Syriza – but have not quit their current party outright so far. He stopped short of quitting Syriza.

Greece must pay the European Central Bank some 3.4 billion euros on August 20 and is hoping the agreement on a new bailout will provide the funds.

In an appeal to lawmakers before the vote, Tsipras defended the decision to accept a program that comes at the price of tax hikes, spending cuts and economic reforms, saying it was a choice between “staying alive or suicide”.

“Greece is living up to its ambitious reform commitments”, he said in a statement after six hours of gruelling talks in Brussels Friday.

A confidence vote was the last thing Greece needed right now, he added, so soon after Tsipras was elected in January.