14 Jul, 2015
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In an important development, Euro zone leaders clinched a deal with Greece to negotiate a third bailout at an emergency summit held in Brussels on 13 July 2015. This deal seeks to keep the near-bankrupt country in the euro zone, thus avoiding the possible event that was given the name “Grexit” by the media. This became possible after Greek Prime Minister Alexis Tsipras accepted almost all the tough conditions proposed by the contingent of European leaders led by German Chancellor Angela Merkel. However the tough conditions imposed by international lenders led by Germany could bring down Tsipras’ leftist government and cause an outcry in Greece. Tsipras will now have to rush swathes of legislation through parliament in coming days to convince his 18 partners to release bridging funds to avert a state bankruptcy and just to begin negotiations on a three-year loan.
Following are the main points of the agreement of Greece with Euro Zone leaders –
– Greece to pass by 15 July 2015 measures including simplifying VAT rates and applying tax more widely, cutting back on pensions and making the national statistics agency independent.
– Greece to pass by 22 July 2015 measures overhauling its civil justice system and implementing EU bank bail-in rules.
– Greece to request continued IMF support from March 2016
Greece to set clear timetable for following measures:
– Ambitious pension reform
– Bring in market reform including on Sunday trading, pharmacy ownership, milk and bakeries
– Privatise electricity transmission network in the country
– Review collective bargaining, industrial action and collective dismissals
– Strengthen financial sector, including action on non-performing loans and eliminate political interference
Greece will also take the following actions:
– Privatisation, involving transfer of assets to independent fund in Greece designed to raise 50 billion euros, three-quarters of which would be used to recapitalise banks and to decrease debt
– Cut costs of public administration and reduce political influence over it. First proposal to be provided by 20 July 2015
– Ensure creditor approval for key legislation before submitting to public consultation or parliament
The above-listed commitments are minimum requirements to start the negotiations with the Greek authorities.