Greece fi­nal­izes new bailout pack­age with cred­i­tors’ broad terms

The China Post - - INTERNATIONAL - BY DEREK GATOPOULOS AND ELENA BE­CA­TOROS

Greece has agreed on the broad terms of a new three-year bailout pack­age with in­ter­na­tional cred­i­tors, with a few last de­tails ex­pected to be ironed out Tues­day.

Fi­nal­iz­ing quickly the deal for about 85 bil­lion eu­ros (US$93 bil­lion) in new loans would pre­vent the coun­try from de­fault­ing on its debts next week and se­cure its fu­ture in the euro.

“We are very close. Two or three very small de­tails re­main,” Fi­nance Min­is­ter Eu­clid Tsakalo­tos said as he emerged Tues­day morn­ing from all-night dis­cus­sions with the cred­i­tors’ ne­go­tia­tors.

The Euro­pean Com­mis­sion, a key ne­go­tia­tor in the talks, con­firmed the progress.

“The in­sti­tu­tions and the Greek author­i­ties achieved an agree­ment in-prin­ci­ple on a tech­ni­cal ba­sis and talks are still on­go­ing on fi­nal­iz­ing de­tails,” said An­nika Brei­dthardt, the Com­mis­sion’s spokes­woman for eco­nomic af­fairs. She said the de­tails were ex­pected to be cleared up Tues­day.

She noted that an agree­ment still re­quires ap­proval from higher-level rep­re­sen­ta­tives, and that se­nior fi­nance of­fi­cials from the 28 EU na­tions would hold a con­fer­ence call later Tues­day.

Greece’s gov­ern­ment is hop­ing to push an agree­ment through par­lia­ment this week, ahead of a meet­ing be­tween eu­ro­zone fi­nance min­is­ters on Fri­day.

Ger­many, the largest sin­gle con­trib­u­tor to Greece’s two pre­vi­ous bailouts and among the tough­est ne­go­tia­tors so far, re­mained cau­tious on the tim­ing. “We will have to ex­am­ine the re­sults that come in the course of to­day,” deputy fi­nance min­is­ter Jens Spahn told n-tv tele­vi­sion.

In­vestors cheered the news progress.

Greece’s gov­ern­ment bor­row­ing rates fell, a sign in­vestors are

of less wor­ried about a de­fault. The 2-year bond yield dropped by 4.2 per­cent­age points to 14.73 per­cent. The Athens Stock Ex­change, which re­opened re­cently af­ter be­ing shut for five weeks dur­ing the most se­vere part of Greece’s fi­nan­cial cri­sis, was up 2.2 per­cent in mid­day trad­ing.

Cash- strapped Greece needs more money by Aug. 20 at the latest, when it has a debt re­pay­ment of just over 3 bil­lion eu­ros to make to the Euro­pean Cen­tral Bank.

A draft of the agree­ment cited by the Greek daily Kathimerini said the deal in­cluded a pack­age of more than 30 mea­sures that would have to be voted on in Greece’s Par­lia­ment im­me­di­ately, fol­lowed by a sec­ond pack­age of mea­sures to be adopted from Oc­to­ber on­wards.

The gov­ern­ment re­leased some tech­ni­cal de­tails of the deal, say­ing it had agreed to have a 0.25 per­cent gov­ern­ment deficit this year and a 0.5 per­cent sur­plus next year, when not count­ing the cost of ser­vic­ing debt.

Greece has agreed to achiev­ing so-called pri­mary sur­pluses of 1.75 per­cent in 2017 and 3.5 per­cent in 2018, the gov­ern­ment said in an emailed note.

The pledges mean the coun­try has avoided hav­ing to im­pose bud­get sav­ings worth about 20 bil­lion eu­ros, it said.

“This prac­ti­cally means that with the cur­rent agree­ment there will be no fis­cal bur­den -- in other words new mea­sures -- in the im­me­di­ate fu­ture,” the note read.

Banks will be strength­ened with new cash in­fu­sions by the end of the year and will have an im­me­di­ate boost of “at least 10 bil­lion eu­ros,” it said. The gov­ern­ment in­sists this means there is no longer any dan­ger that the banks may have to raid bank de­posits to re­store their fi­nan­cial health.

The gov­ern­ment also said that banks will not make re­pos­ses­sions and auc­tions of pri­mary res­i­dences will not oc­cur within 2015.

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