Greece agrees bailout deal
Marathon negotiations end issues over debt with its foreign lenders
GREECE and its international lenders have reached a multibillion euro bailout agreement on after talking through the night, potentially saving the country from financial ruin.
The agreement, reached after a 23-hour session of talks, must still be adopted by Greece’s parliament and euro zone countries. The single currency bloc’s finance ministers are due to meet on Friday, giving time to finalise the deal before a major debt repayment next week.
The negotiations appeared to have resolved all the main outstanding issues, after Greece’s leftist government effectively capitulated last month to creditors’ demands for deep austerity measures to receive loans.
“Finally, we have white smoke,” said a Greek Finance Ministry official after exhausted Greek officials emerged in a central Athens hotel to announce the two sides had agreed on terms. “An agreement has been reached.”
Finance Minister Euclid Tsakalotos confirmed only “two or three small issues” were pending. Greek shares rose, with the banking index surging six per cent.
“The institutions and the Greek authorities achieved an agreement in principle on a technical basis. Now as a next step, a political assess- ment will be made,” European commission spokeswoman Annika Breidhardt said in Brussels.
Still, officials in sceptical northern European countries remained cautious, pending final approval of the deal.
“There remains work to be done with details,” said Finland’s Finance Minister Alexander Stubb. “We must take one step at a time. Agreement is a big word.”
Approving the agreement would close a painful chapter of aid talks for Greece, which fought against austerity terms demanded by creditors for much of the year before relenting under the threat of being bounced out of the euro zone.
After a deal in principle last month, the latest round of talks began in Athens three weeks ago to craft an agreement covering details of reform measures, the timeline for their implementation and the amount of aid needed. The deal is expected to go before the Greek parliament today or tomorrow and then vetted by euro zone finance ministers on Friday. This would pave the way for aid disbursements by August 20.
Facing a revolt from the far-left of his leftist Syriza party, Prime Minister Alexis Tsipras is expected to again rely on opposition support to push the package through parliament.
Once the deal is ratified, he is expected to tighten his grip over the party by facing down rebels at a party congress next month before considering early elections.
Even then, doubts remain about whether a leftist government elected on a pledge to reverse austerity can implement the punishing terms of an agreement that critics say compromises the government’s basic principles.
Popular misgivings about funnelling yet more money to Athens run deep in Germany, the euro zone country that has contributed most to Greece’s two bailouts since 2010.
The overnight talks also found common ground on final fiscal targets that should govern the bailout effort.