Greece agrees to bailout terms, more austerity
Officials OK pension cuts, tax increases in exchange for $3.1B to avoid default
ATHENS, GREECE— Greece and its rescue creditors have reached a deal needed to unfreeze the country’s bailout program and avoid a default this summer, although it leaves Greeks facing years more of austerity and hardship.
Following months of tough negotiations, the government and creditors agreed that Greece should make another round of pension cuts in 2019 and commit to maintaining a high budget target along with new tax increases after the current bailout program ends next year.
In return, the creditors will pay Greece the $3.1 billion it needs to avoid defaulting on its loans in July, and start talks on how to ease the country’s debt burden.
Prime Minister Alexis Tsipras’ leftwing government is set to approve the new cuts in parliament by midMay, so that finance ministers from the nations using the euro can unfreeze more bailout funds at a scheduled meeting on May 22.
Tsipras’ governing coalition has a majority in parliament of just three seats.
Greece has been surviving on bailout loans since 2010 in return for harsh spending cuts and tax increases that have put nearly a quarter of the workforce out of work and seen 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.
Tsipras’ governing Syriza party is trailing badly behind rival conservatives in the polls, and he has insisted it will not seek elections until his term ends in 2019.
“We are paying the price of Mr. Tsipras’ deception,” conservative oppo- sition leader Kyriakos Mitsotakis said. “He promised us more funding without austerity, but what we ended up with is more austerity and no additional funding.”
The agreement with creditors was reached after a nightlong session of talks at a hotel in Athens. Government officials said lenders dropped their demands to abolish a long list of employment rights and also agreed to the expansion of benefit schemes for jobless and low-income families.
Hours before the deal, protesters had gathered at the entrance of the hotel during large May Day rallies in the capital, but riot police blocked them from entering the building.
The European Commission, International Monetary Fund and European financial institutions welcomed the agreement and noted that “the Greek authorities have confirmed their intention to swiftly implement this policy package.”
They said the deal “will now be complemented by further discussions in the coming weeks on a credible strategy for ensuring that Greece’s debt is sustainable.”