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Greece gets new liquidity boost ahead of key vote

ATHENS: Greece’s liquidity-starved banks got a new cash injection from the European Central Bank on Wednesday, hours before a key vote in parliament on further economic reforms demanded by international creditors in return for a third bailout.

A European banking official told The Associated Press the ECB decided to increase emergency liquidity to Greek banks by 900 million euros ($980m) — the second such cash injection in just under a week.

Fearing a run by depositors flocking to take their savings out of Greek banks, the government imposed capital controls more than three weeks ago, restricting daily withdrawals to 60 euros ($65) per account holder. Extra ECB liquidity means that Greek banks will still be able to hand out cash.

Prime Minister Alexis Tsipras’ radical left-led government faces its second crunch test in parliament in a week later Wednesday. Failure to pass the economic measures could undermine his coalition and trigger fresh fears over the country’s future in the shared euro currency.

The vote on changes to Greece’s judicial and banking sectors is one of the requirements that Greece’s European creditors have insisted upon in order for negotiations on a third bailout for Greece worth around 85 billion euros ($93bn) to begin.

After losing the support of a large chunk of his own party’s lawmakers during a vote last week on a creditor-demanded austerity measures, Tsipras has to rely on support from pro-European opposition parties to pass measures.

Many in Tsipras’ Syriza party, including former finance minister Yanis Varoufakis, voted against last week’s austerity measures, which included big increases to sales taxes that took effect on Monday. If more than a handful of others join the dissent in Wednesday’s vote, then Tsipras’ government could be in trouble.

At least five Syriza lawmakers said Wednesday they would vote against the draft law – including the firebrand parliament speaker, Zoe Konstantopoulou. In a letter to Greece’s president and Tsipras, Konstantopoulou protested that the measures constituted a “violent attack on democracy,” arguing that lawmakers were being given very little time to study the nearly 1,000-page bill.

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