Hopes for deal next week
Greece will aim to finalize an agreement with lenders next week in the hope of being in a position to pass the deal through Parliament by next Thursday.
There are a number of issues that need to be ironed out in the next couple of days if the government is to be able to keep to a timetable that would allow the European Stability Mechanism to disburse money before Greece has to repay 3.2 billion euros to the European Central Bank on August 20.
Some of the issues on which there is yet to be agreement include changes to farmers’ taxation, scrapping nuisance taxes, further product market liberalization, deregulating some professions and allowing Sunday trading.
The other issues that must be settled are which prior actions have to be approved now and how much fresh funding Greece will receive on approval of the third bailout.
If the new agreement is approved by the Greek Parliament on Thursday, eurozone finance ministers are likely to convene the next day to give their green light as well. This will mark the start of parliamentary activity in other eurozone countries, starting with Finland on August 14. This part of the approval process is expected to last until August 18, allowing the ESM time to disburse money to Greece.
Athens is hoping to receive a total of 25 billion euros later this month. Of that, 12.5 billion will be used to pay off debt, 10 billion euros will go toward bank recapitalization and another 2.5 billion will be used to reduce state arrears, which reached 5.3 billion at the end of June.
If the deadlines are not met, though, Greece is likely to receive a bridge loan, as it did last month. The new loan is likely to be worth 5 to 6 billion euros and will cover the payment to the ECB, as well as obligations to the International Monetary Fund in September.
Members of the EU’s Economic and Financial Committee took part in a conference call late on Friday to discuss the state of negotiations. Sources familiar with the content of the call told Reuters that Athens is on track to reach an agreement with the institutions soon, possible in time for August 20.
