Wednesday

19th Jun 2019

Deal reached on new Greek bailout

  • The Greek Parliament is expected to vote on prior actions on Thursday. (Photo: EUobserver)

The Greek government and its creditors reached a deal on a third bailout programme on Tuesday morning (11 August).

"An agreement has been reached. Some minor details are being discussed right now", a Greek official told the Reuters press agency.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

“We are very close. There are a couple of very small details remaining on prior actions,” Greek finance minister Euclid Tsakalotos also told reporters in Athens.

The news has not yet been confirmed by Greece's creditors - the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF)

Greek media report that the final issues to be settled included privatisation plans and so-called non-performing loans - loans which are not being repaid to banks.

The creation of a €50 billion privatisation fund requested by Germany to repay Greece's debt and refinance the banks was already a major sticking point at a July euro-summit in Brussels.

According to the Kathimerini newspaper, differences over non-performing loans were about whether to create a 'bad bank', as demanded by the Greek government, or to bundle them and sell them off, as requested by the creditors.

Prior actions

The Greek parliament is expected to be recalled from its summer recess to vote on the prior actions on Thursday.

According to Kathimerini, the actions include the phasing out of early retirement, scrapping tax breaks for islands by the end of 2016, the deregulation of the energy market, and the implementation of already planned privatizations.

The exact amount of the bailout was not known Tuesday morning, but discussion were on a programme of up to €86 billion.

Talks had started on 27 July, after the Greek parliament voted two sets of reforms requested by creditors. A last round of discussions was held all weekend and for almost 23 hours from Monday to early Tuesday.

Greece needs a first tranche of bailout funds before 20 August, when it is due to repay €3.2 billion to the ECB.

A few hours before Tuesday's deal was announced, a first agreement was reached on primary budget targets - the budget balance before debts are repaid.

In 2015, according to the deal, Greece will be able to run a primary deficit of 0.25 percent of GDP. In 2016, it will be required a primary surplus of 0.5 percent, 1.75 percent in 2017, and 3.5 percent in 2018.

These targets take into account the decline of the Greek economy since the start of the year, and especially since capital controls were imposed at the end of June.

In previous discussions between Greece and the creditors, in June, the primary budget targets were a 1 percent surplus in 2015 year, 2 percent in 2016, 3 percent in 2017, and 3.5 percent in 2018.

Obstacles

Several obstacles remain before Greece can effectively receive the bailout, however.

First, the deal will have to be endorsed by eurozone finance ministers, either at a meeting or by conference call probably on Friday.

Then it will have to be ratified by several eurozone parliaments, including the German Bundestag.

Doubts remain about Germany's willingness to sign a bailout agreement before all issues are settled.

"The principle 'thoroughness over speed' applies here in particular", Stefan Seibert, the spokesman of chancellor Angela Merkel, told reporters on Monday.

The issue of Greek debt is another obstacle to overcome.

It was not clear on Tuesday morning if the IMF would participate in the bailout. It earlier said several times it would not do so if there was no restructuring of the debt, which it considers unsustainable.

But Germany, which is opposed to any haircut, wants the IMF to participate.

On Monday, Slovakia's prime minister Robert Fico also said he would refuse any restructuring of Greek debt.

"Slovakia will not remit a single cent on Greek sovereign debt, as long as I am prime minister", Fico said in an interview to Austria's Der Standaard.

Doubts emerge on IMF participation in Greek bailout

The IMF has indicated it won't take part in a third bailout for Greece unless a deal is reached on debt relief. Meanwhile the Greek PM has a called a September party congress on the bailout.

Merkel 'skeptical' about Greek bailout deal

Germany is still casting doubts on its readiness to endorse the agreement reached by Greece and the creditors and might try to get more concessions from Athens.

Greek deal puts Tsipras in straitjacket

The 29-page document agreed with Greece's creditors outlines wide-ranging reforms of the Greek economy and administration with tight deadlines and fiscal targets.

News in Brief

  1. New socialist group leader to push for Timmermans
  2. Romanian ex-PM frontrunner to head new liberal group
  3. France, Germany and Spain in fighter jet deal
  4. Tusk grilled in Poland over role as PM
  5. Italy is 'most credible' US partner in EU, says Salvini
  6. EU blames Sudan junta for killings and rapes
  7. Report: EU may suspend Turkey customs union talks
  8. Swiss stock exchange could lose EU access in July

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNo evidence that social media are harmful to young people
  2. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  3. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  4. Nordic Council of MinistersEducation gets refugees into work
  5. Counter BalanceSign the petition to help reform the EU’s Bank
  6. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  7. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  8. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  9. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  10. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  11. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  12. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody

Latest News

  1. EU urges Swiss to move on talks or face sanction
  2. Frontex transparency dispute goes to EU court
  3. Commission goes easy on scant national climate plans
  4. Macron and Mogherini decline to back US accusation on Iran
  5. EU summit must give effective answer on migration
  6. Spain's Garcia set to be next Socialist leader in parliament
  7. Erdogan mocks Macron amid EU sanctions threat
  8. The most dangerous pesticide you've never heard of

Stakeholders' Highlights

  1. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  2. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  3. Nordic Council of MinistersNordic commitment to driving global gender equality
  4. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  5. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  6. Nordic Council of MinistersNordic talks on parental leave at the UN
  7. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  8. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  9. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  10. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  11. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  12. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law

Join EUobserver

Support quality EU news

Join us