Hopefully quelling the fears of a Grexit forever, the Greek government reached a deal with its creditor institutions on a new bailout package today. The agreement was reached following marathon overnight talks with the European Commission, European Central Bank, the European bailout fund and the International Monetary Fund.
The deal will secure 85 billion euros in bailout funds for the ailing Southern European country, over a three year period, in exchange for overhauling reforms to the Greek economy, including the contentious subjects of taxes and pensions. European national parliaments will have to ratify the deal quickly, as the next Greek debt payment to the European Central Bank is due on August 20.
Even sooner, the Greek parliament must pass legislation enabling the reforms demanded by the creditors prior to the meeting of Euro-area finance ministers scheduled for Friday. The draft of the memorandum of understanding reportedly contains thirty-five specific measures that the Greek government has now agreed on, including steps to deal with the country’s low retirement age in the public sector, opening up the energy and pharmaceuticals markets, changes to the tax structure for shipping companies and more.
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As before, the Greek prime minister and his new finance minister will find it hard to guarantee the support of their own far left Syriza party. The reforms legislation is expected to pass in the parliament, based on support from the Greek opposition.
The Greek government also said today, that based on the new deal it sets the targets for a budget deficit of 0.25 percent of gross domestic product in 2015, and surpluses of 0.5 percent in 2016, 1.75 percent in 2017, and 3.5 percent in 2018.