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All you need to know about the Greek bailout deal

The Greece parliament will need to agree on the total package of reforms by Wednesday before talks begin on the country's financial rescue.

Agencies | July 13, 2015 | Updated 16:55 IST
All you need to know about the Greek bailout
Photo: Reuters

Euro zone leaders and Greece PM Alexis Tsipras finally agreed on a roadmap to a possible third bailout for near-bankrupt Greece  on Monday, but Athens must enact key reforms this week before they start talks on a financial rescue to keep it in the European currency area.

If Greece meets the conditions, the German Parliament would meet on Thursday to mandate its Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble to open the talks on a new loan. Then Eurogroup finance ministers could formally launch the negotiations.

The third bailout package is proposed at 86 billion euro ($95.78 billion) in which International Monetary Fund is likely to play the full role.

Here are the key points to know about the deal:

 

  • The  Greece parliament will need to agree on the total package of reforms by Wednesday. The reforms-simplifying VAT rates, applying tax more widely, cutting back on pensions and making the national statistics agency independent-must be enacted by Wednesday night and the entire package endorsed by Parliament before talks can start.
  • Monetise Greek assets: A fund will be set up to monetise assets in Greece. The privatisation measures are more realistic with no deadline, which was initially three years. The leaders agreed that the assets can't be sold quickly, and a crisis is possibly the worst time for quick privatizations. Greek state assets worth up to 50 billion euros will be placed in a trust fund beyond government reach to be sold off with proceeds going directly to pay down debt. EU and IMF experts evaluate Greek assets currently earmarked for privatisation at just 7 billion euros.
  • As of now, 25 billion euros from the bailout package will be used to recapitalise Greek banks.
  • Eurogroup finance ministers said Greece needed 7 billion euros of funding by July 20, when it must make crucial bond redemption to the European Central Bank, and a total of 12 billion euros by mid-August when another ECB payment falls due.
  • There might be possible debt reprofiling but there would be no nominal cuts.
  • Greeks shall cut costs of public administration and reduce political influence over it. First proposal to be provided by July 20.
  • Greece to pass by July 22 measures overhauling its civil justice system and implementing EU bank bail-in rules.
  • Greece to set clear timetable for following measures: pension reform; product market reform including Sunday trading, pharmacy ownership, milk and bakeries; privatise electricity transmission network; action on non-performing loans and eliminate political interference.
  • Most importantly, Germany dropped a proposal to make Greece take a "time-out" from the euro zone if it failed to meet the conditions.

 

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