Greek banks to reopen after lenders’ pledge

ATHENS, Greece – Greece on Thursday won vital pledges of support from bailout lenders needed to keep its economy from collapsing, but officials in Athens said the painful austerity measures demanded in return were likely to force an election within months.

Hours after parliament approved the tough new cuts, the government promised to reopen banks on Monday and gradually restore services – helped by higher cash support from the European Central Bank.

The ECB announced it was increasing emergency credit to Greek banks, adding another $980 million in support over one week. And eurozone lenders pledged short-term loans so Greece can cover its debts and negotiations for a new three-year bailout worth $93 billion.

The news buoyed world markets and came as a relief in Greece, where banks and the stock market have been closed for nearly three weeks.

Officials in Prime Minister Alexis Tsipras’ government, however, were still reeling from the contentious post-midnight vote that saw 1o-in-4 lawmakers from Tsipras’ left-wing Syriza party vote against the raft of tax increases, pension cuts and other economic reforms.

Interior Minister Nikos Voutsis said an early election was now seen as “very likely” – either in September or October.

With another austerity vote planned next week, Voutsis cautioned that the level of dissent shown Thursday had fallen just short of toppling Tsipras’ 6-month-old government, which was elected on a pledge to free Greece from debilitating austerity.

In Berlin, Finance Minister Wolfgang Schaeuble insisted that growing calls to ax a portion of Greece’s $348 billion debt mountain would not be accepted and again raised the idea of a Greek exit from the euro.

“No one knows at the moment how it’s supposed to work without a debt cut, and everyone knows that a debt cut is incompatible with membership in the currency union,” Schaeuble told Deutschlandfunk radio.

However, the head of eurozone finance ministers, Jeroen Dijsselbloem, shot down talk of a Greek euro exit. “Schaeuble,” he said, “If you reach an agreement after such long and hard talks, you have to stand behind it, and that goes for all sides.”

Germany’s insistence on tough terms for Greece even after bailout austerity deepened and extended its six-year recession has earned Schaeuble criticism.

A Munich-based think tank, Project for Democratic Union, said it was time for Schaeuble to resign.

U.S. Treasury Secretary Jacob Lew met Thursday with Schaeuble and French Finance Minister Michel Sapin, and urged Greece’s creditors to make sure the struggling country emerges from negotiations with debts it can manage. In a telephone call with Tsipras, he also called on the Greeks to “fully” implement the budget cuts and economic reforms they had agreed to.

In Athens, Deputy Finance Minister Dimitris Mardas said banks would reopen Monday after a three-week closure, though withdrawal restrictions would remain.

Bank customers “can deposit cash, they can transfer money from one account to the other,” but they can’t withdraw money except at ATMs, Mardas said.

A withdrawal limit of $67 a day would stay in place, he said, though Greek authorities were working on a plan to allow people to rollover access to their funds. So if, for example, they don’t make it to a cash machine one day, the next day they can take out $131.

European Commission head Jean-Claude Juncker confirmed an EU-wide bailout fund would give Greece a short-term loan to cover it through mid-August.