Greece to vote on second bailout bill in new test for Tsipras

(ATHENS) - Prime Minister Alexis Tsipras on Wednesday faced a new test of his authority in parliament, where lawmakers were to vote on a second batch of reforms to help unlock a huge new bailout for Greece's stricken economy.

The embattled premier suffered a major rebellion by MPs in his radical-left party Syriza last week during a first vote on the reforms demanded by Athens' international creditors.

Tsipras had to rely on opposition MPs to pass the law, which approved sweeping changes to debt-crippled Greece's taxes, pensions and labour rules, a key condition for opening talks on a bailout worth up to 86 billion euros ($93 billion) over three years.

The second bill covers civil justice reforms, a bank deposit protection scheme, and measures to shore up the liquidity of the banks, which reopened Monday after a three-week closure imposed to avert a collapse of Greece's financial system.

Tsipras is expected to win Wednesday's vote comfortably after opposition parties said they would back it, but analysts say the debate will show whether the premier can avoid another deep split within his own party and head off the risk of early elections after only six months in power.

The government received a boost Tuesday when Standard & Poor's raised its credit rating on Greece by two notches to CCC+ from CCC-, still in junk territory but a step in the right direction.

"The priority right now is to normalise the (financial) system, but at the same time to protect low-income citizens," state news agency ANA quoted Tsipras as saying after a meeting with bank chiefs on Wednesday.

The banks have seen some 40 billion euros withdrawn since December by customers anxious over the safety of their cash -- seriously undermining the banks' ability to function normally.

Bloomberg News reported that the European Central Bank boosted its cash lifeline for Greek banks -- the programme known as Emergency Liquidity Assistance -- by 900 million euros on Wednesday, in a move that had been announced last week.

The ELA is the only source of funding for banks until the bailout package can take effect -- and, by extension, the sole financial lifeline preventing the Greek economy from imploding.

Finance Minister Euclid Tsakalotos said he hoped to see the banks recapitalised by the end of the year.

- 'Urgent situation' -

Parliamentary committees were debating the second bailout bill on Wednesday ahead of a full sitting of the 300 lawmakers in the evening, with a vote expected around midnight (2200 GMT).

Justice Minister Nikos Paraskevopoulos said he would back the legislation, despite having reservations over its changes to the justice system. "The country is facing an urgent situation," he said. "I do not want to contribute to an eventual default."

Civil servants' union ADEDY and the communist-affiliated PAME union were set to stage protests during the emergency debate. When the more controversial reforms were passed last week, angry anti-austerity protesters clashed with police outside parliament, hurling petrol bombs.

Tsipras was forced to reshuffle his cabinet last week, having sacked three ministers for voting against the first bailout bill.

Vassiliki Georgiadis, a political science professor at Athens' Panteion University, said the split within Syriza was between hard-left MPs -- "some of whom have spoken of a Greek exit from the eurozone as the only solution" -- and those more sympathetic to Tsipras's arguments.

She added that it would be "difficult" for the 40-year-old premier to continue in office if he is forced to rely on opposition MPs to get laws passed.

Government spokeswoman Olga Gerovassili said Monday that elections would not be "useful at the moment", and the government had "no intention" of calling early polls.

Gerovassili said negotiations with Greece's creditors -- the European Union, European Central Bank and International Monetary Fund -- would resume immediately after Wednesday's vote.

The EU's Economic Affairs Commissioner Pierre Moscovici said they were aiming to finalise the deal by mid-August.

Both sides are under huge pressure to finalise the terms of the rescue before August 20, when Greece owes the ECB a loan repayment of 3.2 billion euros it cannot afford.