Greece, Creditors Reach Agreement on Terms of Third Bailout

A file photograph showing Greek Finance Minister Euclid Tsakalotos at the start of a special Eurogroup Finance ministers meeting on Greece, at European Council headquarters in Brussels, Belgium, 11 July 2015. Photo: EPA

Greece and its international creditors have reached on Tuesday an agreement on the terms of the third bailout programme, which Athens has to be granted in order to avoid bankruptcy.

After marathon overnight talks, which had started on Monday, Greek Finance Minister Euclid Tsakalotos informed that an agreement has been reached with only some minor details remaining on prior actions, daily Kathimerini informs.

Greece and its creditors have agreed on the primary budget targets for the 2015-2018 period, Bloomberg reports.

The agreement foresees a primary deficit of 0.25 % of GDP, a primary surplus of 0.5 % of GDP in 2016, a primary surplus of 1.75 % of GDP in 2017 and a primary surplus of 3.5 % of GDP in 2018.

The latest round of negotiations focused on the fiscal outlook of Greece and the size of the total bailout, which may slightly exceed the initially foreseen EUR 86 B.

According to media reports, the agreement foresees the immediate implementation of 35 prior actions by the government in Athens.

The measures include changes to tonnage tax for shipping firms, reducing the prices of generic drugs, a review of the social welfare system.

Among the other actions are strengthening of the Financial Crimes Squad (SDOE), phasing out of early retirement, scrapping tax breaks for islands by the end of 2016.

Further reforms include the implementation of the product market reforms proposed by the Organization for Economic Cooperation and Development (OECD), deregulating the energy market and proceeding with the privatisation programme.

In case the agreement is finalised, it is likely to be subjected to voting in the Greek Parliament on Thursday, which will be followed by a meeting of the Eurogroup on Friday and a process of approval by other eurozone parliaments.

Greece is expecting to be granted aid before August 20, when a payment of EUR 3.2 B to the European Central Bank (ECB) falls due.

Athens is expecting to receive EUR 25 B in the first tranche in order to pay off its creditors, reduce government arrears and to be left with EUR 10 B for bank recapitalisation.

 

 

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