Greek bailout deal getting its finishing touches
Deal must be approved by Aug. 18
ATHENS Lawmakers are on pace to finish negotiations with creditors on Greece’s third bailout in five years by Tuesday, hastening a close to one of the country's most painful economic periods in recent memory.
As of Monday, parliament was still negotiating specifics of a package that includes removing some agricultural tax breaks, deregulating the energy market, selling off state assets and a developing a plan for handling bad loans, which account for more than a third of all bank lending. A formal vote by parliament on the package could come Wednesday or Thursday, the Finance Ministry said.
Greece and its creditors — the International Monetary Fund, European Stability Pact and European Commission — must approve the deal by Aug. 18 to give Greece access to fresh capital in time to make a $3.4 billion payment to the European Central Bank by Aug. 20.
Greece says it needs around $22 billion quickly to repay loans and revive its beleaguered banking sector. The total bailout package will be worth $95 billion, which comes on top of $265 billion the country received in two prior bailouts since 2010.
Greeks had rejected austerity measures dictated by the creditors, but the government later accepted even stricter terms to avoid worse financial chaos.
On June 28, Greece defaulted on an IMF loan, the first industrialized country to do so, and cashsqueezed banks imposed limits on withdrawals amid widespread protests and union strikes.
Investors reacted positively to progress in negotiations. The Greek Stock Exchange climbed 2.1% Monday, though it remains at barely half its level of a year ago.
It reopened on Aug. 3 after being shuttered for five weeks, and lost about a fifth of its value in the first three sessions. It has since started inching back up.
Greek bond yields edged down by about 1.1% Monday.
The optimism added to a positive outlook for European stocks Monday. Germany’s DAX index gained 1% to 11,605 and France’s CAC 40 index jumped 0.8% to 5195.