Greek bailout package agreed ‘in principle’ says EC negotiator
Finance minister Euclid Tsakalotos sounded upbeat about the prospects of quickly finalising a deal that would prevent the country’s default next week and secure its future in the euro.
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Hide Ad“We are very close. Two or three very small details remain,” he said as he emerged from all-night discussions.
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 finalising details,” said Annika Breidthardt, the Commission’s spokeswoman for economic affairs.
She added 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 yesterday.
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Hide AdGermany, the largest single contributor to Greece’s two previous bailouts, remained cautious. “We will have to examine the results that come in the course of today,” deputy finance minister Jens Spahn said.
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.
Investors cheered the news of progress, with Greece’s government borrowing rates falling, a sign investors are less worried about a default. The Athens Stock Exchange, which reopened recently after being shut for five weeks, was up 2.2 per cent in midday trading.
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Hide AdGreece’s government is hoping to push the new e85bn (£60bn) three-year agreement through parliament this week, ahead of an expected meeting between eurozone finance ministers on Friday.
It needs more money by August 20 at the latest, when it has a debt repayment of just over e3bn (£2.1bn) to make to the European Central Bank.
The government released limited details of the deal yesterday, saying it had agreed to have a 0.25 per cent government deficit this year and a 0.5 per cent surplus next year, when not counting the cost of servicing debt.
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Hide AdGreece has agreed to achieving primary surpluses of 1.75 per cent in 2017 and 3.5 per cent in 2018, the government said in an emailed note. The pledges mean the country has avoided having to impose budget savings worth about e20bn (£14bn), 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 e10bn” (£7bn), it said. The government insists this means there is no longer any danger that the banks may have to raid deposits to restore their financial health.
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Hide AdThe deal is opposed by many in the governing left-wing Syriza party, who say the spending cuts go against the government’s pledges when it was elected in January.
Greece has relied on international bailouts worth a total e240bn (£170bn) since it was unable to borrow on bond markets in 2010.