Athens: A deal was hammered out between Greece and its international lenders on Tuesday for a new bailout of 85 Billion Euros. The currency bloc’s finance ministers are expected to give their approval on Friday in time for Greece to make a crucial 3.2 billion euro debt repayment that falls due next week.
The deal, which came after 23 hours of talks that continued through the night, must still be adopted by Greece’s parliament and by euro zone countries and this is tough hurdle. Greek shares rallied, with the banking index climbing 3 percent, while the government’s two-year borrowing costs fell to a five-month low.
The agreement gives Greece some respite after a turbulent year marked by acrimonious talks with lenders, the imposition of capital controls and a three-week shutdown of its banks before Athens capitulated last month to creditors’ demands for deep austerity measures in order to receive new loans.
But the deal has caused a rebellion within Prime Minister Alexis Tsipras’s Syriza party, forcing him to rely on opposition support in parliament and raising talk of early elections in the autumn.
Tsipras wants parliament to approve the deal by Thursday, before the euro zone finance ministers reconvene. This would pave the way for aid disbursements by Aug. 20, when a 3.2 billion euro debt payment is due to the European Central Bank.
But he could face an obstacle from Parliament Speaker Zoe Konstantopoulou, one of the creditors’ fiercest critics, who may delay a parliamentary committee expected on Wednesday till Thursday, potentially pushing back the vote, Mega TV reported.
Doubts remain about whether a leftist government elected on a pledge to reverse austerity can implement the punishing terms of a deal critics say compromises the left’s basic principles.
“It is a very tough deal. The left had to either escape or take huge responsibilities and prove it can help society,” Health Minister Panagiotis Kouroumblis told local radio, calling for snap elections to lock in popular support.
The European Commission confirmed a deal had been struck at a technical level and that political assessment would follow.
Euro zone finance ministry officials taking part in the so-called ‘euro working group’ agreed to recommend approval of the bailout when euro zone finance ministers meet on Friday, a source at the Italian Treasury said.
Still, officials in skeptical northern European countries remained cautious, pending final approval of the deal.