After months of wrangling, Greece finally worked out a bailout agreement with its European creditors on Monday that will, if implemented, secure the country’s place in the euro and avoid financial collapse, according to the Associated Press (AP).
The terms of the deal, however, will be difficult both for Greeks and their radical left-led government, which since its election in January had vowed to stand up to the creditors and reject the budget cuts they have been demanding.
Before it can get 85 billion euros ($95.07 billion) in bailout cash and support for its banks to reopen, the Greek government will have to pass a raft of “austerity” measures (budget cuts / tax increases). These include sales tax increases, reforms to pensions, and labor market reforms.
Under the deal struck with creditors during an all-night meeting in Brussels, the Greek parliament must approve by Wednesday key reforms,” writes the Associated Press.
They include VAT tax increases and pension cuts, and protecting the independence of Greece’s statistics service, which at the start of the crisis in 2009 was found to have greatly miscalculated the country’s finances for years.
The Greek leader – Alexis Tsipras – and his left-wing government were elected in January to stand up to budget demands.
For them, the payoff of the negotiations in Brussels was clear: about 85 billion euros ($95.07 billion) in loans and financial support over three years, preserving Greek membership in the euro, and helping their country stave off financial collapse.
“We managed to avoid the most extreme measures,” Tsipras said after the summit, and he said he successfully got creditors to drop a demand that Greek assets be transferred abroad as a form of collateral, according to U.S. News and World Report.