The Guardian — The news that Greece and the lenders reached a deal were announced by Jeroen Dijsselbloem at the end of the eurogroup meeting on Friday evening .
‘We have reached a political deal, and solved the last issues’, Dijsselbloem told reporters in Brussels.
That means Greece’s third bailout, worth around 86 billion euros, is agreed
Dijsselbloem also paid tribute to the Greek government’s recent efforts to help create the deal. This does not however mean the third Greek bailout is totally “in the bag”. Some national parliaments need to give their approval – including Germany’s Bundestag next week.
But short of a major shock, the €86bn bailout package is finally a done deal, after nearly seven months of wrangling, deadlock and drama.
The key points of the deal
The Memorandum of Understanding (MoU) between Athens and its creditors includes four key elements — including some very stretching budget targets, unpopular economic reforms, including to pensions, and sweeping changes to a banking sector that has been battered this year.
- a medium-term target for a primary surplus of 3.5% of GDP by 2018 to be achieved through fiscal reform
an ambitious reform of the pension system
key labour and product market reforms to open up the economy to investment and competition
financial sector measures to safeguard its stability, including a recapitalisation of the banks and urgent steps to tackle the non-performing loan (NPL) problem in the banking sector
There is also a new pledge to privatise Greek state assets, through a new controversial fund that is designed to raise up to €50bn.
In return, Greece gets the promise of new measures to guarantee debt sustainability. Prime minister Tsipras has repeatedly hailed that commitment as a (rare) key victory.
But Europe has not committed to actually cutting Greece’s debt mountain. Instead, it argues that:
- debt sustainability can be achieved through a far-reaching and credible reform programme and additional debt related measures without nominal haircuts.
In other words, by giving Greece longer to repay its existing loans and cutting the interest rates charged.
- If necessary, the Eurogroup stands ready to consider, possible additional measures to ensure that Greece’s gross financing needs remain at a sustainable level.
Debt sustainability is vital, to get the IMF on board.
But after two Greek bailouts, the Fund hasn’t yet committed to a third. First, it wants to see proof that Greece has implemented all the fiscal, structural and financial sector reforms on the table. Plus an agreement on possible debt relief to ensure debt sustainability.