The four institutions representing Greece’s creditors are: the ECB, the worldwide Monetary Fund, the European Commission and the European Stability Mechanism rescue fund. The four made an initial agreement early on Tuesday regarding measures from pension changes to taxes intended to unlock over 85 billion euros in funds for Greece.
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Though the radical left-led government was elected on a staunchly anti-austerity platform in January, it has been forced into a policy u-turn after bailout talks came close to collapse last month.
Investors reacted with relief to news of the outline deal, with shares in Athens closing 2.14 percent higher after three straight days of gains.
Banks will be strengthened with new cash infusions by the end of the year and will have an immediate boost of “at least 10 billion euro” (£7.1 billion), it said.
EU sources stressed the “toughness” of the demands placed on Greece, amid scepticism from German MPs, who must also vote on the measures.
Greece’s finance minister will have to try to push this deal through Parliament.
But despite acknowledging the positive step forward, the European Commission was quick to say this was only a “technical-level agreement” and there has yet to be any political agreement.
But Finnish Finance Minister Alexander Stubb sounded a cautious note, saying more work needed to be done with the details to finalise the agreement.
Greece’s parliament will convene for an emergency session to ratify the text of a new multibillion-euro bailout, according to the parliament website, but the timing of the crucial vote remained uncertain and doubts persisted about whether the deal enjoyed the full support of all EU capitals.
In 2016 the primary surplus – the balance not including debt service – will be 0.5 per cent, followed by 1.75 per cent in 2017 and 3.5 per cent in 2018, the source added.
“Whilst an agreement may have been reached and Greece looks increasingly likely to meet the 20th August payment deadline, we are not out of the woods yet”, said Dean Turner, economist at UBS Wealth Management, commenting on the risk of Greece leaving the euro zone.
The German government has welcomed Tuesday’s deal, calling it a “substantial result”.
Across Europe, officials are examining the details of Greece’s latest bailout package.
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These include a cost-cutting review of the social welfare system, privatization of some key state assets and gradually increasing the age of retirement to 67 by 2022.
