Eurozone finance ministers have agreed on a third bailout package for Greece on Friday, following months of negotiations.
New loans of €86bn (£61bn) are guaranteed for Greece over the next three years. The first payment of €26bn will be received in the coming week, partly because Greece is due to default on a €3.2bn loan to the European Central Bank (ECB) on August 20th.
The International Monetary Fund urged the Eurogroup to grant Greece debt-relief. The role of the Washington-based IMF remains uncertain. Participation by the Fund would lighten the cost carried by Europe, however disagreement between the creditors on the issue of debt-relief worries finance ministers.
“I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own,” IMF Managing Director Christine Lagarde told the Eurogroup in a telephone conversation.
The bailout deal included extensive reform conditions for Greece, including harsher austerity measures. More than 40 members of Prime Minister Tsipras’s Syriza Party voted against the final conditions of the deal on Friday night. It passed Greek Parliament however, with 222 yes-votes to 64 no-votes and 11 abstentions.
European Commission President Jean-Claude Juncker said that the deal sent a “loud and clear” message that Greece would remain in the currency group.
PM Tsipras has made concessions on a number of contentious issues. Some of these concessions were previously rejected by the Greek people in last month’s referendum. They include an increased value-added tax (VAT) for Greek households and a permanent property tax.
Greece has also agreed to structural reforms within its economy, aimed at inviting investment and becoming a more competitive market.
In return, the Eurogroup has offered Greece lower budget targets, giving its economy more time to recover.