Greece’s Prime Minister Alexis Tsipras clinched a third bailout worth up to 86 billion euros, in a historic agreement to prevent the country crashing out of the Eurozone.
In the marathon negotiations which dragged all-night, Tsipras agreed to tough reforms in return for a three-year bailout worth up to 86 billion euros (USD 96 billion). This is the third time that Greece has received a bailout in less than five years.
European Union President Donald Tusk broke the news on Twitter, ending a bitter six-month struggle between Tsipras’s anti-austerity government in Athens and the rest of the Eurozone.
“EuroSummit has unanimously reached agreement,” former Polish premier Tusk said. “All ready to go for ESM programme for Greece with serious reforms and financial support.”
Greece was in desperate need of this bailout programme. Last week the country applied for a third programme of Eurozone’s bailout fund, the European Stability Mechanism after its previous bailout expired on June 30.
Banks in Greece were running dry, after being shut for two weeks, because of no extra funding from European Central Bank. To survive the mess, Athens by itself would have to print its own currency, thereby effectively leave the euro.
On July 5, in a referendum passed by the country, Greeks overwhelmingly rejected the bailout terms offered by international creditors.
Reports say, the new bailout terms might even be more strict than the previous ones offered.
Athens would now have to push through even tougher laws, said Finnish Finance Minister Alex Stubb, after the Eurozone finance ministers met over the weekend.
Athens will have to introduce harsh conditions on labour reform and pensions, VAT and taxes, and measures on privatisation, Stubb explained.
Some of the key sticking points in the deal are said to included the involvement of the IMF and a call for Greece to park assets of up to 50 billion euros (USD 56 billion) in a fund in Luxembourg for privatisation.
Ahead of this deciding summit in Brussels, German Chancellor Angela Merkel had complained of a loss of trust in Athens and had called the summit Greece’s “last chance.”