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Friday 30 September 2016

Greece to vote on €85bn bailout package today

Michele Kambas and Tom Körkemeier

Published 13/08/2015 | 07:34

A pro-Euro demonstrator is silhouetted behind a Greek flag during a rally outside the Greek Parliament in Athens, in this photo dated Monday, June 22, 2015. The latest incarnation of Greeces economic crisis over the span of a month saw Greece in the end accept harsh austerity measures from creditors to save the country from bankruptcy. (AP Photo/Daniel Ochoa de Olza)
A pro-Euro demonstrator is silhouetted behind a Greek flag during a rally outside the Greek Parliament in Athens, in this photo dated Monday, June 22, 2015. The latest incarnation of Greeces economic crisis over the span of a month saw Greece in the end accept harsh austerity measures from creditors to save the country from bankruptcy. (AP Photo/Daniel Ochoa de Olza)

The Greek parliament is due to meet later today to vote on the country's latest bailout deal.

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The move comes after it emerged yesterday that the European Union is keen to keep Greece on a tight rein after its latest bailout, with sources saying the €85bn deal will be reviewed by lenders in October and any discussion of debt relief will only come at a later stage.

Greece was forced to accept tougher terms than were initially on offer and its creditors want to be sure that reforms are being carried out as promised. Germany, for one, said the agreement lacked clarity on Greece's policy direction.

"There will be a strong first review of the implementation of measures in October," an EU source said.

At the same time, rescue funds for Greek banks will be placed in a special account and the lenders will receive fresh equity only after a "stress test" is finished by the end of October, according to several sources.

An initial €10bn will be made available "immediately" to shore up confidence in Greek banks, while authorities conduct a detailed asset quality review that is expected to take several months.

Greek banks will also have to submit viable business plans to European authorities before fresh support is disbursed and will only receive cash once authorities sign off on the plans.

The bailout agreement reached on Tuesday gives Greece some respite after months of acrimonious talks with its creditors, the imposition of capital controls and a three-week shutdown of its banks.

It has however caused a rebellion in Prime Minister Alexis Tsipras's Syriza party and could force early elections in the autumn, while doubts remain about whether a leftist government elected on a pledge to reverse austerity can implement the tough terms of the deal.

The bailout, Greece's third since 2010, must still be adopted by parliament in Athens and approved by euro zone countries.

Tsipras said the agreement would end economic uncertainty as his government submitted a bill outlining a three-year bailout program to parliament, pushing for quick approval that would allow rapid disbursement of aid.

Tsipras wants parliament to expedite its approval so committees can discuss the agreement before a vote expected on Thursday evening.

That would allow euro zone ministers meeting in Brussels on Friday to sign off on the deal and pave the way for aid to be disbursed before a €3.2bn debt repayment falls due on August 20.

The legislation covers tax and pension reform, public administration reform, the relaunch of a privatization scheme which stalled earlier in the year and the establishment of a wealth fund for privatization projects which will be supervised by European institutions.

According to the 29-page memorandum of understanding Greece agreed with creditors, a copy of which was obtained by Reuters, Greek must move to rapidly privatize its ports, regional airports and its power grid operator.

Greece would also take steps to tackle the mountain of bad loans weighing on its banks.

Germany, the major euro zone contributor to successive Greek bailouts, welcomed the deal as a "substantial result" but wanted to study it further before submitting it for approval by parliament in Berlin.

"So one can say that the agreement goes in the right direction," said Steffen Seibert, Chancellor Angela Merkel's spokesman. "But at this hour it is not yet possible to say whether we are at the point where we can start the national process, in other words call for a vote in the Bundestag."

Germany's Finance Ministry criticized the memorandum of understanding (MoU) as showing "no full clarity on the direction of policies".

Reuters

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