Greece reaches deal on third bailout with creditors

ATHENS, Greece – Greece on Tuesday, August 11, reached a deal on a multi-billion bailout with its international creditors, officials said, with the government planning to submit it to parliament later in the day.

“An agreement was reached,” a government source told Agence France-Presse, 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 told Agence France-Presse that the remaining details “do not affect the main body of the agreement.”

The Athens stock market opened up 1.64% on Tuesday after 3 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 finalize the list of new reforms required of the Greek government in exchange for a lifeline of up to 86 billion euros ($94 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 euros ($3.7 billion) to the European Central Bank.

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, August 13, and eurozone finance ministers could be asked to approve it the next day, August 14.

Late-night talks

The marathon negotiations dragged on into the wee hours of Tuesday, with government sources saying at around 4 am local time (0100 GMT) that Athens had agreed on fiscal targets for the next three years.

Athens committed to a primary deficit of 0.25% 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%, followed by 1.75% in 2017 and 3.5% 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 Organization for Economic Cooperation and Development (OECD), 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 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”. 

However, the government spokeswoman insisted Monday that “there are no electoral thoughts”.

“The election talk cultivated in recent days is neither useful nor does it correspond to reality,” spokeswoman Olga Gerovasili said in a statement, adding that the government was focused on concluding a deal and then negotiating debt relief with its creditors. – John Hadoulis, AFP / Rappler.com