Bailout parties stumble toward coalition deal

 
Tim Wallace
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GREEK politicians were edging towards forming a pro-bailout coalition last night, after a finely balanced general election left no party with an overall majority.

New Democracy leader Antonis Samaras is set to become Prime Minister after winning 29.7 per cent of the vote.

As the largest party in parliament is awarded an extra 50 bonus seats, that gives him 129 seats in the 300-strong parliament.

New Democracy is expected to form a coalition as early as today with socialist party Pasok, which came third with 12.3 per cent of the vote and 33 seats.

Headed by former finance minister Evangelos Venizelos, Pasok also supports the €130bn (£104bn) bailout and is likely to join New Democracy in pushing through the tough spending cuts and financial reforms which are required if the government is to receive the cash it desperately needs.

Officials hope fourth-largest party Democratic Left could also join the grouping, strengthening the coalition further with its 17 seats.

Analysts expect the parties to push for some relief on the bailout package, and the troika of the IMF, EU and ECB will have to ensure the new government will go along with the agreement before handing out more cash.

“We would expect negotiations to be completed within a month and the next EU-IMF tranche could then be released some time in the second half of August,” said Barclays’ Antonio Garcia Pascual, noting that this means the government will run short of cash before the tranche is handed over.

“Funding for the government in the interim could be done via delayed expenditures (ie running arrears),” he suggests.

Radical leftist party Syriza was invited to join the coalition, but refused as its members oppose the bailout.

Syriza came second in the election with 26.9 per cent of the vote and 71 seats in parliament.