The Greek parliament has passed new austerity measures amid violent protests on the streets of Athens.
The tough reform measures passed easily, but Prime Minister Alexis Tsipras’s grip on power appears shaky after a block of MPs from his ruling Syriza party voted against the reforms.
Tsipras said that while he didn’t believe in the deal, he had accepted it to avoid economic disaster.
Earlier, anti-austerity protesters hurled petrol bombs at police guarding the Greek parliament as MPs debated the deeply unpopular reforms they need to vote in to clear the way for a eurozone rescue of Greece’s failing economy.
Riot police used tear gas to push back dozens of hooded protesters and secure the area in front of the parliament building on Wednesday after the demonstrators’ Molotov cocktails set ablaze parts of Syntagma square in central Athens.
The street violence reflected broad public anger at measures now backed by Tsipras despite a July 5 referendum rejecting near-identical terms from Greece’s creditors.
The sweeping changes to Greece’s taxes, pensions and labour rules could unlock a rescue of up to 86 billion euros ($A127 billion) agreed by eurozone leaders on Monday.
But the viability of the bailout was in doubt after the International Monetary Fund issued a stark warning that Greece’s creditors will have to go “far beyond” existing estimates for debt relief – an issue eurozone hawks such as Germany have already rejected out of hand.
Tsipras has said he did “not believe in” the deal but agreed to sign it “to avoid disaster” as his country teetered on the brink of economic collapse.
An IMF official said the fund would only participate in a third bailout if EU creditors produce a clear plan.
French MPs however overwhelmingly backed the agreement on Wednesday, with Prime Minister Manuel Valls saying it was the only way out of the crisis.
EU powerhouse Germany’s Bundestag is set to vote on the plan on Friday.
Under the deal, eurozone governments will contribute between 40 and 50 billion euros, the IMF will contribute another chunk and the rest will come from selling off state assets and from financial markets, a European official said.
Polls published late Tuesday by Kapa Research found 72 per cent of Greeks surveyed thought the deal was necessary, if tough.
Under the deal, Greek assets for privatisation will be parked in a special fund worth up to 50 billion euros, with some 25 billion euros of the money earmarked to recapitalise Greece’s banks.
The European Commission on Wednesday formally backed a controversial proposal to use an EU-wide crisis fund to cover Greece’s short-term cash needs, officials said, setting up a clash with Britain and Germany.
– with AFP
