BERLIN – Chancellor Angela Merkel’s Cabinet approved legislation on Monday that would give Greece $29.6 billion over three years as part of a wider bailout, as the German government acknowledged that letting Greece go bankrupt could send the euro into a tailspin and hurt Germany’s own economy.

“It doesn’t only mean that we help Greece, but that we stabilize the euro as a whole, which helps people in Germany,” said Merkel, who, along with Germany, had been battered by critics for dragging its feet on any decision until Greek bonds were relegated to junk status last week.

The remark was a nod to the popular discontent in Europe’s biggest economy about having to pay so much to help a fellow European Union country that many Germans feel has been fast and loose with its finances for years.

The European Central Bank, meanwhile, suspended its rating limits on Greek debt.

Both moves came after European governments and the International Monetary Fund agreed Sunday to give $145 billion in loans to Greece over three years.

The loans came after Athens adopted a new round of austerity measures that provoked fresh uproar among Greek workers.

IMF officials say Greece could start receiving money from the rescue package in about a week.

Germany would contribute $11.1 billion for the first year of the bailout this year, followed by $18.5 billion over 2011 and 2012, or 28 percent of the overall package.

The money would come in the form of credit extended to Greece from KfW Development Bank, which is backed by the German government.

The draft law backed by the Cabinet will be debated by both houses of parliament, and Merkel wants to have it approved before she heads to Brussels on Friday for an EU summit on Greece.

 

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