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30th Jan 2023

EU confirms Greek bailout breakthrough

  • Juncker has already started the political process with a series of top-level phone calls (Photo: consilium.europa.eu)

The European Commission has confirmed a “technical” accord with Greece on its third bailout, which is likely to inlcude the International Monetary Fund (IMF).

Commission spokeswoman Annika Breidthardt told press in Brussels on Tuesday (11 August): “We have achieved an agreement in principle on a technical basis and talks are still ongoing on details … What we don’t have at the moment is a political agreement and that’s what we need”.

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She said the outstanding details are expected to be finalised later on Tuesday.

She also said deputy finance ministers from the 28 EU countries are to hold a telephone conference on Tuesday afternoon to “take stock”.

She noted the political process is already underway, with commission head Jean-Claude Juncker having spoken by phone with Germany’s finance minister Wolfgang Schaeuble and with the Greek PM Alexis Tsipras on Monday.

Juncker also plans to speak with German chancellor Angela Merkel and with French president Francois Hollande by phone on Tuesday.

Breidthardt said the technical talks, at the Hilton hotel in Athens, are being conducted by the “mission chiefs” of the commission, the European Central Bank (ECB), the International Monetary Fund (IMF,) and the Greek finance ministry.

She declined to give further information.

But the fact the IMF representative has endorsed the agreement increases expectation the Washington-based body will take part in the new bailout.

The IMF previously said it will only join in if there is a restructuring of Greek debt, an idea disliked in Germany.

For its part, Greece’s Skai TV reports that of the 35 “prior actions” the creditors had asked for, the problematic details remain on: privatisations; non-performing bank loans; and energy liberalisation.

Greek officials told the Kathimerini daily the deal is to be discussed by parliamentary commitees on Wednesday and voted on Thursday.

They also said the Greek PM, Alexis Tsipras, spoke by phone with the German chancellor and the French president on Monday.

If Tsipras gets the prior actions through parliament, euro-area finance ministers are likely to hold a snap meeting on Friday to discuss the accord.

The clock is ticking because Greece needs aid to repay an ECB loan on 20 August.

But Germany has said the deadline could be covered by a bridging loan instead of a full-blown bailout deal, worth up to €86 billion, if the bailout accord is not ready in time.

"We're talking about a program for three years, it needs to be negotiated thoroughly”, German deputy finance minister Jens Spahn told the ARD broadcaster on Tuesday morning.

"It must be convincing that it's not just about August 20”, he added.

“It's not just about making savings, that it works for the budget, but above all about how Greece ... earns money in the next few years, what is the 'business model' so to speak”.

Any political accord at euro finance ministers’ level will also have to be ratified by the Bundestag, and a handful of other euro parliaments.

But Tuesday’s news already prompted a rally on the Athens stock exchange and a drop in the cost of its two-year and 10-year bonds.

Deal reached on new Greek bailout

The Greek government says it has agreed terms with creditors on a third aid programme. But questions remain over the amount of the bailout and IMF participation.

Debt relief open to Greece, says Merkel

Greece could receive relief on its debt mountain within months as soon as creditors confirm that it is making good on promised economic reforms, Angela Merkel has said.

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.

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