Greece agrees on broad terms of new bailout package
Athens, Greece - Greece has agreed on the broad terms of a new three-year bailout package with international creditors, with only a few details left to iron out, the finance minister said on Tuesday.
Euclid Tsakalotos sounded upbeat about the prospects of finalizing quickly a deal that would prevent the country's default next week and secure its future in the euro.
"I think we are very close. Two or three very small details remain," he said as he emerged Tuesday morning from the discussions with negotiators representing Greece's creditors. He did not elaborate on the outstanding details, which are expected to be cleared up by the end of the day.
Government aide Theodoros Mihopoulos earlier said on Twitter that the negotiation had been completed and that "some details remain."
Though Greece's creditors have not yet confirmed a deal could be finalized Tuesday, investors cheered the news.
Greece's government borrowing rates fell, a sign investors are less worried about a default. The 2-year bond yield fell by 4.2 per cent points to 14.73 per cent.
The Athens Stock Exchange, which reopened recently after being shut for five weeks during the most severe part of Greece's financial crisis, was up 2.2 per cent in midday trading.
Greece's government is hoping to push the new 85 billion-euro ($93 billion) three-year agreement through parliament this week, ahead of an expected meeting between eurozone finance ministers on Friday.
A key test will be the reaction of Greece's creditor countries. Germany, the largest single contributor to Greece's two previous bailouts, has stressed the importance of being thorough in the complicated negotiations.
"We have at least seen in recent days and weeks that the Greek government is really ready for serious negotiations - it was different before, and that is already a good sign," German deputy finance minister Jens Spahn told n-tv television. "And now we will have to examine the results that come in the course of today."
Spahn stressed that the new bailout will be a three-year program rather than a short-term program of help. "So we will look closely at the extent to which this holds for three years and not just for a few days."
Greece needs a deal by August 20 at the latest, when it has a debt repayment of a little more than 3 billion euros to make to the European Central Bank. The country won't be able to make that payment without funds emerging from the country's third bailout in just over five years.
However, many in the governing left-wing Syriza party are voicing their opposition to the deal, which would see the imposition of further spending cuts among a series of austerity measures.
Syriza lawmaker and dissenter Costas Lapavitsas reiterated his opposition and said he would not vote in favour of the new deal in Parliament.
"Left-wing governments must take left-wing actions," he said on private Mega television.
Greece has relied on international bailouts worth a total 240 billion euros ($263 billion) since it lost market confidence and was unable to borrow from anyone else in 2010. To secure funds from the bailouts, successive governments have had to implement a series of spending cuts, tax hikes and reforms.
While the austerity has reduced budget overspending, the measures compounded a deep recession and fuelled record high unemployment. Figures next week are set to confirm that Greece's recession deepened in the second quarter as concerns over the country's euro future dented confidence.
Though the radical left-led government was elected on a staunchly anti-austerity platform in January, it has been forced into a policy U-turn after bailout talks came close to collapse last month.
While Greece's parliament ratified further tax hikes and reforms, the rebellion by hardline Syriza lawmakers has left Prime Minister Alexis Tsipras' party with only a nominal parliamentary majority. It depends on opposition backing to pass key creditor-demanded legislation.
That has stoked talk that Tsipras will call early elections soon after the bailout deal is signed. Tsipras still retains strong personal support in opinion polls, which show Syriza heading for a potentially big victory.