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Greece – Creditors reach Deal: 27 austerity measures & structural reforms

After a negotiations marathon that lasted 22 hours, the Greek government and its creditors reached an agreement on the 3. bailout for Greece. Information indicates that there have been compromises on both sides so that the deal could be sealed on technical teams level, some minor issues were still open.

“Some minor details were still being discussed,” a Greek official told Reuters Tuesday morning, something confirmed also by Greek finance minister Euclid Tsakalotos.


“We are very close. There are a couple of very small details remaining on prior actions,” Tsakalotos told reporters.

According to Greek media, both sides agreed not to take any new measures concerning the achievement of the budgetary targets for 2015-2016. Both sides agreed that budgetary targets will be

Primary Deficit of -0.25% of GDP for 2015, but Primary Surplus of 0.5% for 2016, 1.75% for 2017 and 3.5% for 2018.

The deal for the 3. bailout program is expected to be submitted to the Parliament later on Tuesday and be voted on Thursday.

The deal will be submitted to Parliament in one bill comprising two articles:

1. first article detailing the new three-year loan program

2. second article setting out the prior actions that Greece must legislate to get the first tranche of loan funding from the new bailout.

The exact amount of the bailout was not known Tuesday morning, but discussion were on a program of up to €86 billion.

A second Memorandum of Understanding will have to be approved by the Greek Parliament in October.

Eurozone ministers will take up the new deal on Friday via teleconference.

On Monday evening, prime Minister Alexis Tsipras held telephone convarsations with German Chancellor Angela Merkel, French President Francois Hollande, European Commission President Jean-Claude Juncker but also with European Parliament President martin Schulz.

According to Greek media, Germany insisted on a ‘bridge loan’, while Greece with support of France and EC favored a deal to be reached right now.

The 3, bailout foresees tough so-called “economic” or structural reforms” which are in reality strict and additional “austerity measures” that again will burden the poor and the needy.

According to daily Kathimerini that obtained the Draft of 3. Memorandum of Understanding (bailout program) of the Greek-Creditors Deal, some 27 austerity measures are expected to be implemented as soon as possible.

Among them are: scrapping early retirement, scrapping tax breaks for islands by the end of 2016, the deregulation of the energy market, the implementation of already planned privatizations.

But the austerity measures that will economically further ‘strangulate’ Greek households are: scrapping low-pensioners benefit (EKAS), increase of health contributions for pensioners without exemptions for the poor, re-introduction of unified property tax (ENFIA), scrapping tax breaks for fuel used by farmers, hikes of interest rates for debt-settlement of 100-installement, scrapping of the 25% cap for seizing salaries & pensions due to debts, scrapping the 1,500-euro cap for seizing bank deposits due to debts, new preconditions for ‘guaranteed minimum pension at the age of 67″, allowing foreclosures of first homes, indirect cuts in civil servants payroll. (More on the 27-page measures on Kathimerini in Greek)

From what I see in Kathimerini’s Draft, there are a lots of real structural reforms 9opening of the professions of engeneers & notaries, measures to scrap delays for judicial rulings, limited so-called “taxes in favor of third parties.”

However the are also some ‘vague and generalized descriptions of measures (like with reference on prescription medicine, restructuring of OECD tool kit etc) and therefore we cannot have a complete picture right now.

The Greek government seems ‘pleased’ with the agreement and a  Greek government official sought to emphasize the positive aspects of a deal between Greece and its creditors reached on Tuesday, claiming that it reduced the prospect of further austerity.

“The deal has reduced Greece’s obligations as regards primary surpluses over the next three years by 11 percent of GDP, the official said, claiming that Greece would avoid austerity measures worth around 20 billion euros over that period.

Among others, the official praised the governments’ successful achievements to hinder:

1. non-performing loans to be sold to companies, as proposed by creditors.

2. bank recapitalization until end of 2015 will be “immediately boosted with at least 10 billion euros,” he said. “In view of this, there is no longer any risk whatsoever of a haircut to deposits.”

3. Privatization Fund: the official said that it foresaw the “exploitation”, not sale of state assets

According to state ERT TV, the government also avoided the sale of the so-called “small-Public Power Company”, as well as the re-introduction of 5 euro for emergencies in public hospitals.

others sources: euobserver, ekahtimerini and others

PS. Get me Schauble on the phone! Immediately! Is he pleased with the deal or does he demand more and more absurd measures?


they chose the sea to MoU

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  1. René Henri Pasche

    A very bitter pill! You might call “compromise” what in reality is “strangulation”. The Primary Surplus is still at 3,5 pc for 2018, a very short period for the implementation of the reforms. Neither in France, Italy or Austria this would be possible in such a short period. What next? Civil disobedience, govermental crises, political chaos ? There are peoples that prefer order and security in these circumstances, but in Greece the extreme love of freedom and equality might complicate the matter. One hope remains: 2018 Mr Schäuble will be retired. And I wish him all the best. But Frau Bundeskanzlerin Merkel will continue the job, of course.

  2. The opening of the architecture & engineering professions was achieved and approved in 2o13 so I have no idea what it is doing here again. It was hardy ‘cIosed’ before i.e. almost zero protection anyway.

    Anyway, since construction has coIIapsed by 87% over 5 years, the question is moot. Archs & engs have retired or moved to Dubai / China for work.

    • keeptalkinggreece

      no worries, foreign companies will revive the construction, build millions of real estate & sell them to Germans 🙂

      • René Henri Pasche

        not to Germans alone, but to EU citizens in general. Germans, of course, but also to French, English, Austrian, Swiss, Rumanian and Bulgarian etc. well-to-do people, and later when the EU will get new Balkan members to Albanians, Slavo-Makedonians, not to forget the Turks. Greece will survive at the end of the century as a geographical name or European province, but without a Greek population. Something like a new Monaco will then thrill the happy fews. And the Greeks? One third will have emigrated, another third changed the nationality or religion whille the last third will have vanished because of hunger or lacking children.

    They have managed to keep GREECE ON THE DRIP FEED.
    As long as everyone is happy being eased into poverty & slavers – wow !