Spotlight: Greece, lenders clinch deal conditional on implementing harsh measures

After marathon tough negotiations, the leaders of eurozone countries reached a bailout agreement for Greece to avoid bankruptcy, provided the Greek government implements harsh austerity measures in the coming days.

"Today we had only one objective, to reach an agreement. And after 17 hours, we have it, we will continue to support Greece," European Council President Donald Tusk told a press conference after overnight talks that ended Monday morning.

The agreement still needs the approval of several national parliaments, including the Greek parliament, Tusk said, adding that the European Council will formally implement the European Stability Mechanism (ESM) program in Greece.

"There is no Grexit," European Commission President Jean-Claude Juncker said, confirming Greek proposals for support have been accepted.

Speaking to media before his return to Athens, Greek Prime Minister Alexis Tsipras hailed the outcome, stressing that now scenarios of an imminent Greek default and Grexit are things of the past.

The path to restore growth in the debt-laden country is paved with creditors' further aid over the next three years, he claimed.

However, the leftist premier admitted that the framework of the 82 to 86 billion euros package (91 to 95 billion U.S. dollars) through the European Stability Mechanism (ESM) would be difficult to implement.

But the alternative for Greece was a dive into chaos, stressed the government, and proponents of the idea that a bad deal was better than no deal.

According to Eurogroup President Jeroen Dijsselbloem, Greece must legislate as of Tuesday sets of harsh measures and reforms as prerequisites to the release of any aid.

"If Athens does that on Tuesday and Wednesday, then the Eurogroup can take a view on Wednesday. And then national parliaments can give their own approval for a third bailout. Then firm negotiations can take place over a new bailout from the ESM," Dijsselbloem said.

According to the official Euro Summit statement released in Brussels Monday, the first round of legislation, which should be passed by the Greek assembly by Wednesday, includes the streamlining of the VAT system and measures to improve the sustainability of the pension system.

The Greek government is due to table the agreement and the first draft bills containing these policies to the Greek parliament on Monday night.

Meanwhile, Greece will be given short-term financing so that Greece can cover its financing obligations in the next weeks as a 3.5-billion-euro debt repayment to the European Central Bank due on July 20.

Dijsselbloem said a fund would be established in Greece and be managed by the Greek authorities under the supervision of the relevant European institutions to privatizing Greek assets or running that asset to make money.

"The money will be used to deal with debts to reduce debts, also it will be used for the repayment or recapitalization of banks," he said.

"In addition, once the 25 billion euros needed for recapitalization is repaid, 50 percent of the remainder will be used for debt reduction, and 50 percent for investment in Greece, so that to work on both debt sustainability and to let Greece return to growth," he explained.

The European Central Bank (ECB) is expected to hold a teleconference on Monday to examine the possibility of resuming the flow of emergency liquidity assistance funds to Greek banks so that they reopen.

Based on the ECB's decision, the Greek government is to announce whether the extraordinary bank holiday, which started on June 29 along with capital controls, would be further extended on Tuesday.

Greek banks have been closed for the past two weeks and are running out of cash while the country's economy is suffering from capital controls.

German Chancellor Angela Merkel said after the summit in a national briefing that the Eurogroup is ready to consider extending the maturity on Greek loans, but a "nominal haircut" is out of the question.

Merkel said she can recommend "with full conviction" that the Bundestag should agree to open negotiations with Greece. But the Greek parliament must approve the entire conditions before the German parliament votes.

German government spokesman Steffen Seibert told reporters later that day the German government would only seek a mandate from the parliament to start negotiations on the new bailout when Greek parliament approved the reforms. Endit