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 who also chairs 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.”
