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1st LD Writethru: Greece reaches third bailout deal with creditors

Xinhua, August 11, 2015 Adjust font size:

Greece has reached an agreement on a third bailout with its international creditors that will help the debt-laden country stay afloat in the euro zone and restore economic growth, the Greek government announced Tuesday.

After marathon talks throughout the summer, the two sides agreed on "mild fiscal adjustment" until 2018 that "allows room for economic growth" and a series of reforms, according to a press release issued by Prime Minister Alexis Tsipras' office.

According to the statement, the fiscal target for 2015 is 0.25 percent of GDP primary deficit. For 2016, the goal is a primary surplus of 0.5 percent, for 2017 of 1.75 percent and for 2018 of 3.5 percent.

It was noted that lenders had asked from the previous government a 3 percent surplus for this year and up to 4.2 percent for 2018.

The leftist government assured once again in the announcement that there was no risk of a "haircut" on deposits.

Under the deal reached at the end of marathon deliberations between Greek ministers and envoys of the four institutions (the International Monetary Fund, the European Commission, the European Central Bank and the European Stability Mechanism) Greek banks will be recapitalized by the end of 2015 with at least 10 billion euros (11.04 billion U.S. dollars).

Concerning the thorny issue of non-performing loans, it was agreed that they will not be sold to special funds, but there will be further talks with lenders on their settlement in autumn.

In regards to another sticking point in negotiations, namely labor market reform, according to the press statement, it was agreed to also examine the issue further in depth in coming weeks and months.

Moreover, the two sides agreed on deregulating the natural gas market "in accordance with EU legislation."

Regarding the key issue of the future of Greece's 50 billion euros privatization program, the Greek side said the new privatization fund from now on "will not oversee the sell off of public assets," but would focus on getting better terms to the benefit of Greek people.

With the new package of measures agreed, Greece has secured its financing needs over the next three years, being "covered with about 85 billion euros worth of funding," the statement added.

According to government sources, the draft bill containing the new bailout and the prior actions needed to unlock a first part of aid in coming days, will be tabled in parliament by Wednesday and put to vote Thursday.

On Friday, the Eurogroup plans to ratify the deal, then other European national parliaments will follow in the coming days.

One of the immediate goals is for Athens to receive international financing in time to repay a 3-billion-euro loan installment to the European Central Bank on Aug. 20. Endit