World Economy

Greece Secures Second Bailout Tranche

The Greek government has agreed to reduce pensions in 2019 and lower tax breaks in 2020.
The Greek government has agreed to reduce pensions in 2019 and lower tax breaks in 2020.

Greece and its creditors have come to a compromise after showdown talks over the latest bailout package in Malta, according to reports. It means Athens will be able to receive a second tranche from the 2015 agreement.

A breakthrough was achieved in the talks between Greece and the eurozone finance ministers on Friday, which will ensure the southern eurozone nation will have enough money to meet a deadline for debt repayments, DW reported.

Greece is awaiting the latest tranche of an €86 billion ($91.6 billion) bailout from the European Stability Mechanism, the eurozone’s rescue fund, that it needs for debt repayments in July.

Eurozone finance ministers meeting in the Maltese capital of Valletta said Athens agreed in principle to the tough new reforms and technical teams would visit Greece as soon as possible to seal the deal.

“The big blocks have now been sorted out and now we just have the final stretch,” Eurogroup head Jeroen Dijsselbloem said after the talks. He said the Greek government accepted to reduce pensions in 2019 and lower tax breaks in 2020 in return for a bailout payment despite widespread public opposition to the new measures.

Greek Finance Minister Euclid Tsakalotos said the commitments would pass through parliament as soon as possible, although the gamble relies on his Syriza party’s razor-thin majority.

Tsakalotos said his eurozone counterparts had also agreed that Greece could boost social spending if budget targets were met, and that debt relief would also come back to the table.

Talks between Athens and its creditors had stalled over the last few months with calls for the Greek government to make additional pension cuts, continue to deregulate the labor market and reduce the tax-exemption ceiling.

The IMF had lobbied for austerity measures on Greece to be eased, but other creditors in Europe had disagreed, calling for €3.6 billion worth of further austerity measures.

Earlier this week, Greek President Alexis Tsipras had demanded a meeting of the eurozone nations if there was no breakthrough at the meeting on Friday.

“Today is an important day, the moment when everyone has to commit to the details of a good agreement,” EU Economic Affairs Commissioner Pierre Moscovici said in Malta.

“Greece needs this; we end the uncertainties that are scaring investors,” he added.

The country is due to pay back €1.3 billion in April to the European Central Bank and a further €4 billion this summer.

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