Greece bailout deal reached

  • 12/08/2015
Greek Economy Minister George Stathakis (L) and Finance Minister Euclid Tsakalotos (Reuters)
Greek Economy Minister George Stathakis (L) and Finance Minister Euclid Tsakalotos (Reuters)

By John Hadoulis

Greece has reached a deal on a multibillion-euro bailout with its international creditors, with the government planning to submit it to parliament later in the day.

"An agreement was reached," a government source said, with Finance Minister Euclid Tsakalotos telling reporters: "We are very close.... There are a couple of very small details remaining on prior actions."

A finance ministry source said the remaining details "do not affect the main body of the agreement".

The Athens stock market opened up 1.64 percent on Tuesday (local time) after three straight days of gains.

In the final stretch, Tsakalotos and Economy Minister Yiorgos Stathakis spent nearly 22 hours talking to senior representatives from the European Union, the European Central Bank, the International Monetary Fund and the European Stability Mechanism to finalise the list of new reforms required of the Greek government in exchange for a lifeline of up to €86 billion.

The deadline for Greece to reach an agreement on what will be its third bailout is August 20, when it must repay €3.4 billion to the ECB.

State broadcaster ERT on Tuesday said Prime Minister Alexis Tsipras had spoken to German Chancellor Angela Merkel, French President Francois Hollande, European Commission chief Jean-Claude Juncker and European Parliament chairman Martin Schultz on the accord.

"Today the deal will be submitted to parliament," Christos Staikos, a member of the ruling Syriza party, told the station.

The chamber is expected to vote on the accord on Thursday, and eurozone finance ministers could be asked to approve it the next day.

The marathon negotiations dragged on into the wee hours of Tuesday, with government sources saying at around 4am that Athens had agreed on fiscal targets for the next three years.

Athens committed to a primary deficit of 0.25 percent of output in 2015, and a surplus in 2016, meaning that no new fiscal measures will be necessary until then, the source said.

In 2016 the primary surplus, the balance not including debt service, will be 0.5 percent, followed by 1.75 percent in 2017 and 3.5 percent in 2018, the source added.

The Kathimerini daily said the Greek government would have to immediately implement 35 measures before the deal can kick in.

These include energy market deregulation, changes to tonnage tax for shipping firms, price cuts in generic drugs, a review of the social welfare system, phasing out early retirement, and implementing market reforms proposed by the Organisation for Economic Co-operation and Development, the daily said.

Tsipras meanwhile is under pressure from many in his radical left Syriza party who say the new accord will pile further austerity on a weakened economy and goes against the party's campaign pledges.

But with his popularity among Greeks still high, Tsipras has warned the dissidents of early elections in the northern autumn if they continue to resist the measures.

Former energy minister Panagiotis Lafazanis, who is opposed to the new bailout agreement, has dismissed it as "a negotiating fiasco" and said Tsipras could not "avoid the outcry by resorting guiltily and hurriedly to elections".