Greece reaches deal on multi-billion euro bailout
Greece and international creditors agreed on a new multi billion euro bailout deal today, a finance ministry official said, in an accord which will keep the country in the eurozone and avert bankruptcy.
After an 23-hour session that began Monday afternoon, exhausted Greek officials emerged in a central Athens hotel to announce the two sides had agreed details of the deal though a couple of minor issues remained to be ironed out.
"An agreement has been reached. Some minor details are being discussed right now," a Finance Ministry official told reporters after marathon overnight talks between Greece and lenders in Athens.
Greece only has minor details to be ironed out with its creditors to reach a bailout deal, according to Greek finance minister Euclid Tsakalotos.
"Two or three small issues," are pending with lenders, Mr Tsakalotos said.
The pact is expected to be worth up to €86bn in fresh loans for debt-ridden Greece, but there was no immediate confirmation of its size.
Greek officials have said they expect the accord to be ratified by parliament on Wednesday or Thursday and then be vetted by euro zone finance ministers on Friday. This would pave the way to aid disbursements by Aug. 20, when a €3.2bn debt payment is due to the European Central Bank.
An 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.
Still, popular misgivings run deep in Germany, the euro zone country that has contributed most to Greece's two bailouts since 2010, about funneling yet more money to Athens.
During talks which dragged through the night, the sides agreed on final fiscal targets that should govern the bailout effort, aiming for a primary budget surplus -- which excludes interest payments --from 2016, a government official said.
Adapted from an earlier baseline scenario, the targets foresee a primary budget deficit of 0.25 percent of gross domestic product in 2015, a 0.5 percent surplus from 2016, 1.75 percent in 2017, and 3.5 percent in 2018, the official said.
Dealing with a mountain of non-performing loans (NPLs) in the banking sector were among the sticking points in talks. Athens wanted to set up a "bad bank" to take on the problem loans, while creditors want NPLs bundled and sold to distressed debt funds. It was not immediately clear how that was resolved.
Officials had also argued over how to set up a sovereign wealth fund in Greece designed to raise 50 billion euros from privatizations, three-quarters of which would be used to recapitalize banks and to reduce the debt.
Both sides had agreed to deregulate Greece's natural gas market, finance ministry sources said.
An agreement would mark the end of a painful chapter on bailout talks for Greece, which fought against austerity terms demanded by creditors for much of the year before accepting a deal under the threat of being bounced out of the single currency.
A deal for up to €86bn in fresh loans to the debt-stricken nation must be in place by August 20, when the repayment to the ECB is due.
Greek banks could get an initial capital injection soon after a bailout deal is clinched, as much as €10bn, even before the ECB completes a stress test, a euro zone official familiar with the issue said.
Greek officials have said they expect the bailout deal to be approved by Greece's parliament tomorrow or Thursday and then vetted by the Eurogroup - finance ministers of the Eurozone - on Friday, paving the way for aid disbursements.
The bailout pact will be voted on in parliament as one bill with two articles - one on the loan agreement and memorandum of understanding and the second on the so-called prior actions that must be completed for aid to be released, another Greek official said.
The Greek economy is expected to contract this year and next. The economy is expected to shrink by between 2.1pc and 2.3pc this year and and 0.5pc in 2016. Policymakers are expecting growth of 2.3pc in 2017.