Greece has, for the time being, averted its debt crisis as the debt strapped economy managed to secure a loan from its international creditors on Tuesday.
The multi-billion-euro bailout agreement came after marathon talks raising hope that Greece would be able to pay back the debt of €3.5 billion it owes to the European Central Bank (ECB) by 20 August.
The Greek officials, engaged in the 23 hours talks with the creditors, announced late on Monday night that a deal had been finalized where the two sides had agreed on terms of the three-year agreement barring a couple of minor issues being ironed out.
"Finally, we have white smoke. An agreement has been reached," a finance ministry official said.
As the news about the agreement reached the market on Tuesday morning, Greek shares rose even as the Greek Finance Minister Euclid Tsakalotos confirmed that only "two or three small issues" were pending. The banking index of Greece rose by 6 percent, while two-year bond yields fell more than 4 percentage points. Greek banks were the worst hit by the economic crisis with shares falling more than 35 percent over the last month.
With threats of being bounced out of the euro zone looming large, the Greek government has had to work hard to get convinced itself as well as a large section of the ruling party over the strict austerity terms that were demanded by creditors for much of the year.
The latest round of talks began in Athens three weeks ago to craft the agreement with details on reforms measures, the timeline for implementation and amount of aid, after a deal in principle last month on keeping Greece in the euro zone.
Though there was no immediate confirmation about the amount of the loan but sources put the amount at 86 billion Euros ($94.75 billion) in fresh loans for the debt-ridden country.
The loan MOU and the conditions would now have to be passed by the Greek parliament and Greek official sources said that they expect the accord to be ratified by parliament on Wednesday or Thursday.
After that the agreement has to be vetted by euro zone finance ministers on Friday. This would allow Greece to clear all obstacles for the repayment of the 3.2 billion euro debt to the European Central Bank to the European Central Bank by August 20.
It is reported that the Greek Prime Minister Alexis Tsipras would have to rely on opposition support to push the package through parliament as a number of far-left minded members of the leftist ruling party, Syriza party are opposed to the strict austerity measures and are expected to oppose the ratification in the Greek parliament. It has also been reported that Alexis Tsipras is seriously considering announcing of fresh elections in Greece after the passing of the agreement in the parliament and after forcing down the rebels of the ruling party at a party congress next month.
Germany, the euro zone country that has contributed most to Greece's two bailouts since 2010, also has reservations about providing yet more money to Athens.
Therefore though the Greek government has been able to clinch the deal with the creditors this time, a lot more needs to be done and a lot more hurdles are yet to be overcome for the cash strapped country to return to the path of economic growth.
(Source: www.reuters.com & www.streetinsider.com)
The multi-billion-euro bailout agreement came after marathon talks raising hope that Greece would be able to pay back the debt of €3.5 billion it owes to the European Central Bank (ECB) by 20 August.
The Greek officials, engaged in the 23 hours talks with the creditors, announced late on Monday night that a deal had been finalized where the two sides had agreed on terms of the three-year agreement barring a couple of minor issues being ironed out.
"Finally, we have white smoke. An agreement has been reached," a finance ministry official said.
As the news about the agreement reached the market on Tuesday morning, Greek shares rose even as the Greek Finance Minister Euclid Tsakalotos confirmed that only "two or three small issues" were pending. The banking index of Greece rose by 6 percent, while two-year bond yields fell more than 4 percentage points. Greek banks were the worst hit by the economic crisis with shares falling more than 35 percent over the last month.
With threats of being bounced out of the euro zone looming large, the Greek government has had to work hard to get convinced itself as well as a large section of the ruling party over the strict austerity terms that were demanded by creditors for much of the year.
The latest round of talks began in Athens three weeks ago to craft the agreement with details on reforms measures, the timeline for implementation and amount of aid, after a deal in principle last month on keeping Greece in the euro zone.
Though there was no immediate confirmation about the amount of the loan but sources put the amount at 86 billion Euros ($94.75 billion) in fresh loans for the debt-ridden country.
The loan MOU and the conditions would now have to be passed by the Greek parliament and Greek official sources said that they expect the accord to be ratified by parliament on Wednesday or Thursday.
After that the agreement has to be vetted by euro zone finance ministers on Friday. This would allow Greece to clear all obstacles for the repayment of the 3.2 billion euro debt to the European Central Bank to the European Central Bank by August 20.
It is reported that the Greek Prime Minister Alexis Tsipras would have to rely on opposition support to push the package through parliament as a number of far-left minded members of the leftist ruling party, Syriza party are opposed to the strict austerity measures and are expected to oppose the ratification in the Greek parliament. It has also been reported that Alexis Tsipras is seriously considering announcing of fresh elections in Greece after the passing of the agreement in the parliament and after forcing down the rebels of the ruling party at a party congress next month.
Germany, the euro zone country that has contributed most to Greece's two bailouts since 2010, also has reservations about providing yet more money to Athens.
Therefore though the Greek government has been able to clinch the deal with the creditors this time, a lot more needs to be done and a lot more hurdles are yet to be overcome for the cash strapped country to return to the path of economic growth.
(Source: www.reuters.com & www.streetinsider.com)
