Greece will get bailout cash, but adds austerity in return
Government agrees to pension cuts in 2019, new round of tax hikes.
ATHENS, GREECE — Greece struck a deal with rescue creditors Tuesday toward getting the bailout cash it needs to avoid another brush with bankruptcy this summer, though it leaves long-suffering Greeks facing years more austerity.
Following months of tough negotiations, the Greek government agreed to make another round of pension cuts in 2019 and commit to new tax increases after the current bailout program ends next year.
In return, creditors will resume loan payouts, and start talks on how to ease the country’s debt burden, which stands at nearly 1 80 percent of t he c ount r y ’s annual GDP.
The need for an imminent re l e a s e of bai l out f unds was becoming increasingly important — Greece is expected to require some 7 billion euros ($7.6 billion) to cope with a summer spike in debt repayments.
Prime Minister Alexis Tsip - ras’ left-wing government is set to approve the new cuts in Parliament by mid-May, in time for finance ministers from the 19 countries that use the euro currency to unfreeze the money at a meeting May 22. At that meeting, discussions over how to ease Greece’s debt repayments will commence.
Two years ago when the country was on the cusp of a euro exit — so-called Grexit — Tsipras signed off on the country’s third international bailout. In return for up to 86 billion euros over three years, his government, which was elected on an anti-bailout mandate, agreed to further austerity and reforms. The money is only released after creditors agree that Greece has met its side of the bargain.
Though increasingly unpopular in opinion polls, Tsipras can get the latest agreement through Parliament, but there’s not much room for maneuver as his governing coalition with a nationalist right-wing party only has a majority of three seatst.
“Tsipras has been able to command remarkable discipline in his party up to now,” said Joan Hoey, regional director for Europe at the Economist Intelligence Unit. “We will see whether that contin- ues to apply in coming weeks.”
Officials in Athens conceded that a more comprehensive agreement needed for the release of funds could take longer.
“This is not a deal that closes the second (bailout) review, but another painful step toward that end,” Hoey said. “We do not know all the details, only that those prior actions will include some very unpopular reforms. ... (It) seems like another case of deal doublespeak.”
Greece has been surviving on bailout loans since 2010 in return for harsh spending cuts and tax increases that have contributed to a sharp rise in unemployment and left more than a third of the population living in poverty or at risk of poverty.
“This is a painful compromise,” Interior Minister Panos Skourletis told state-run ERT television.