Greece will have to wait for bailout funds (UPDATED)

Greece is expected to get final authorization to receive $170 billion in bailout funds Thursday, The Wall Street Journal reports, as Greek Prime Minister Lucas Papademos meets with European officials. On Feb. 29, Greek lawmakers voted 203-58 in favour of steep spending cuts worth about $4.3 billion. According to Bloomberg News, the cuts affect government workers who will see their pensions and wages slashed:

Pension and wage cuts are reducing state spending and changes to labor rules are liberalizing the jobs market. The measures are also driving the economy deeper into a recession and fanning discontent among Greeks as unemployment has jumped to 21 percent. The economy shrank 6.8 percent last year and is set to contract for a fifth year in 2012.

Meanwhile, the Associated Press reports that investors hoping for insurance compensation from an agreement to reduce the amount Greece owes its bondholders will not see the billions they expected, at least for now:

Heavily indebted Greece and its bondholders agreed on a debt swap last week that would reduce the face value of their holdings by 53.5 percent. (…)

The panel, which had been convened by the International Swaps and Derivatives Association, had been asked by investors to rule whether the bond swap agreement constituted a so-called “credit event”. This would have meant that bondholders who hold credit-default swaps — complex financial products that act as insurance against default — would have been paid off.

The committee, meeting in New York and London, ruled that the Greek bond deal was still being carried out and did not yet constitute a credit event — but that the question could come up again.

UPDATE: Greece will have to wait another week before it can secure its bailout funds. The BBC is reporting European leader who met with Prime Minister Papademos said the bailout must await the debt swap with private bondholders on Mar. 8.