Greece and its creditors from the euro area and the International Monetary Fund concluded months of negotiations regarding the second review of the country’s current bailout program after hours of final discussions that lasted until early Tuesday in Athens, unlocking discussions for the country’s debt relief.
Greece yielded to a number of demands set by its creditors, including pension cuts and a lower tax-free threshold of around 5,700 ($6,221) to 6,000 euros from 8,636 euros now. The agreement will also allow more shops to be able to work on Sundays in various areas throughout the country. “The discussion for an agreement that secures Greek debt’s sustainability now begins,” Greek Finance Minister Euclid Tsakalotos told reporters in Athens after the meeting.
If Greece beats its targets, the government will be able to implement a number of offsetting measures to ease the austerity burden, including subsidies for rent of as much as 1,000 euros per year, as much as 250 million euros in child support and lower contributions to medication for those of lower income, a Greek government official, who spoke on condition of anonymity said. Collective bargaining for Greek employees will be reinstated starting September 2018, the official said.
Creditor officials from the euro area and the IMF will leave Athens Tuesday and return to their bases to craft the compliance report for a meeting of euro-area finance ministers on May 22. Greek lawmakers will vote on the measures agreed with creditors before the report is crafted. The compliance report will allow the disbursement of the next tranche of Greece’s 85 billion-euro loan, while the country’s debt-relief measures are expected to be discussed during that meeting.
The discussion on Greece’s primary surplus targets for the years after the end of the program in 2018 is attached to negotiations about the sustainability of the country’s debt and will now be held on a euro-area finance ministers’ level, Tsakalotos said.
Greek lawmakers will have to vote on the package before the ministers’ meeting, with Prime Minister Alexis Tsipras’s government aiming to have both the measures and offsetting measures voted on in the first half of this month.