Germany's cabinet has approved its contribution to the Eurozone and IMF bailout of Greece. The German parliament is set to pass the legislation later this week to allow its loan—worth 22.4 billion Euros over three years—to be paid.
There has been significant public opposition in Germany to assisting the debt-ridden Greek economy. Markets gave the bailout deal, agreed over the weekend, a muted response. Germany was ultimately pushed into action by its own economic interest, with Chancellor Angela Merkel saying the bailout was the only way to ensure the stability of the Euro.
The reason for this law is a last resort—an emergency situation—in that Greece in effect no longer had access to the financial markets, and there was an impact on the stability of the Euro, Mrs. Merkel told a press conference. She later told ZDF television: We said time and again, if the stability of our currency was in danger, we would act quickly and decisively. And this is the point that we've reached.
Germany is paying the largest share of the unprecedented 110 billion Euros rescue package. But investors have questioned whether the rescue package will be enough to solve Greece's deep-seated problems and whether it will be able to carry out the severe budget cuts agreed as part of the deal.
The first part of the loan will be released before 19 May—the date of Greece's next debt repayment, the EU said. The International Monetary Fund (IMF) is expected to approve its portion of the loan this week, its managing director Dominique Strauss-Kahn said.
Meanwhile, also on Monday, French politicians prepared to vote on 16.8 billion Euros of financial aid for Greece, France's share of the Eurozone bailout. The National Assembly, the lower house of parliament, began debating the measure and was set to vote on it late on Monday evening or on Tuesday. It must then pass to the Senate later in the week.
Meantime, the Greek Government will be presenting its bailout package to parliament on Tuesday, with the aim of using emergency rules to get it approved within a week.