Eurozone finance ministers on Friday approved a third bailout worth up to 86 billion euros (US$95.55 billion) to keep Greece in the single currency in return for an unprecedented package of reforms that Athens had previously rejected.
Earlier on Friday, Greek lawmakers passed the accord following a bitter all-night debate on the conditions demanded by Athens’ creditors which could alter many aspects of daily life in the nation.
“New loans of up to 86 billion euros would be made available over the next three years to Greece,” the European Commission said after six hours of talks in Brussels.
European Commission President Jean-Claude Juncker said six months of negotiations with the left-wing government of Greek Prime Minister Alexis Tsipras — who won office in January opposed to the creditors’ demands — had been difficult and testing.
“The message of today’s [meeting] is loud and clear. On this basis, Greece is and will irreversibly remain a member of the euro area,” Juncker said in a statement
A first disbursement for Greece next week is set to total 13 billion euros, helping cover a debt payment to the European Central Bank due on Thursday.
Greek Minister of Finance Euclid Tsakalotos emerged from Friday’s meeting and said it was now up to his compatriots to forge ahead.
“Let’s hope that the Greek people will be able to make the best of this deal, to make [the] best of the reforms and the ability to reform and mitigate any negative consequences that surely exist within it,” Tsakalotos said in a statement.
The accord goes far beyond economic management to include an extensive overhauls of Greece’s health and social welfare systems plus its business practices and public administration.
Seemingly small details of daily life are also set to be affected by the new rules, from visits to the doctor to an extension of the expiry dates on pasteurized milk in the supermarkets.
German Minister of Finance Wolfgang Schaeuble said: “We want to seize this chance” to revive the Greek economy.
“We must remain at the same time cautious, because naturally it concerns large sums made available,” he told a press conference.
Dutch Minister of Finance Jeroen Dijsselbloem, who chaired the Eurogoup meeting, said ministers “welcomed the wide scope of policy measures [in the accord] which if implemented with determination will address the main challenges facing the Greek economy.”
Under the program, Greece would have to balance its books to produce a primary budget surplus — that is, before interest payments — and take on a major privatization program to help reduce a debt mountain of about 320 billion euros.
The sale of state assets should produce more than 6 billion euros in the three years but the ultimate target is 50 billion euros, to recapitalize the banking system and reduce debt.
Dijsselbloem recognized that dealing with the debt was among the most important issues, especially for the IMF, which believes Greece cannot get back on its feet without some relief.
“The Eurogroup considers the continued program involvement of the IMF as indispensable,” he said in a statement.
IMF managing director Christine Lagarde participated in the meeting via a teleconference link and in a separate statement said the accord “is a very important step forward.”
“However, I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own,” she said. “Thus, it is equally critical for medium and long-term debt sustainability that Greece’s European partners make concrete commitments ... to provide significant debt relief, well beyond what has been considered so far.”
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