Greek parliament approves law forcing local govts to lend to state

By Renee Maltezou ATHENS (Reuters) - Greece's parliament on Friday approved a decree forcing state entities to lend cash to the near-bankrupt state, defying protests by municipalities and labour unions. Just weeks away from running out of cash, Athens has been tapping into the cash reserves of public sector entities through so-called repo transactions to cover its needs. On Monday it ordered entities, including local governments, to lend spare cash to the state while it tries to reach a deal with sceptical foreign creditors on new financial aid. Several hundred protesters rallied outside parliament in central Athens as lawmakers voted on the measure, with 156 in favour and 104 against in the 300-seat chamber. "It is the state's commitment to pay salaries and pensions," the government's parliamentary speaker, Nikos Filis, told lawmakers, defending the legislation. "The money will be earning better interest rates (than what banks pay)." In a symbolic protest, municipal workers walked off the job for three hours on Friday. Some local government officials have threatened to defy the orders, while others said they needed explanations before contributing to the state's coffers. "If the prime minister tells us that the country's rescue depends on the cash of local governments we will hand it all. We just need to be convinced that there is a plan," the country's municipalities' union KEDE said in a statement, asking for a meeting with Prime Minister Alexis Tsipras. The protests add to pressure on Tsipras, whose decision to continue battling with lenders has become increasingly unpopular. A University of Macedonia poll this week showed 45.5 percent approved of the government's negotiating stance, down roughly 30 points from February. Athens is locked in a battle with its EU and IMF creditors on a cash-for-reform deal but progress has been limited. Euro zone finance ministers ended a meeting in Riga on Friday saying the prospects for a deal were distant with time running out and accused Greece for failing to move quickly. Athens must pay the International Monetary Fund almost 1 billion euros in May. It has said it wants to honour its obligations and needs lenders to offer something in return. "For all this time, Greece and the Greek people have been bleeding to fulfil their debt obligations - a proof of the government's willingness to reach a solution," government spokesman Gabriel Sakellaridis told Mega TV. "The Greek government has done what was due," he said. "We expect to see similar willingness from the lenders' side in order to speed up the process." (Additional reporting by Angeliki Koutantou and George Georgiopoulos, Editing by Deepa Babington and Dan Grebler)