Greece bailout deal broadly agreed, says Finance Minister

Syriza lawmaker and dissenter Costas Lapavitsas reiterated his opposition and said he would not vote in favour of the new deal in Parliament.

Former energy minister Panagiotis Lafazanis, who is opposed to the new bailout agreement, has dismissed it as “a negotiating fiasco” and said Tsipras could not “avoid the outcry by resorting guiltily and hurriedly to elections”.

There will still be questions about the achieveability of this and close attention will be paid to what the deal says about possible debt restructuring being agreed in the months ahead.

Greece’s prime minister Alexis Tsipras has called an emergency session of parliament to vote on a new bailout deal after the cash-strapped country reached an agreement with its creditors earlier today.

The clock is ticking because Greece needs aid to repay an European Central Bank loan on 20 August.

“Of course, we’ve heard this all before so shouldn’t get carried away until we’ve had official confirmation but it all sounds very promising”, he said in a research note.

Juncker also plans to speak with German chancellor Angela Merkel and with French president Francois Hollande by phone on Tuesday.

Three European official said the size of the first payment wasn’t discussed in detail during Tuesday’s call.

Greece and its global lenders on Tuesday reached an agreement on a third bailout deal, a media report said. “Now as a next step, a political assessment will be made”, European Commission spokeswoman Annika Breidhardt said in Brussels. The marathon negotiations dragged on into the early hours of Tuesday, with Athens committing to a primary deficit of 0.25 percent of output in 2015, and a surplus in 2016, meaning that no new fiscal measures will be necessary until then, the source said.

Harris Ikonomopoulos, president of the British Hellenic Chambers of Commerce, based in Athens, was positive about the progress regarding the bailout.

Greek shares rallied, with the banking index climbing 3 percent, while the government’s two-year borrowing costs fell to a five-month low. The 2-year bond yield dropped by 4.2 percentage points to 14.73 percent.

In 2016, the government will have to run a surplus of 0.5%, which has to go up to 1.75% in 2017. Without legislative approval in that timeframe, Greece would need to request further bridge financing to cover the European Central Bank payment while the bailout is finalized. “This practically means that with the current agreement there will be no fiscal burden – in other words new measures – in the immediate future”, the note read.

The pact, according to one Greek Finance Ministry official will lead to banks receiving 10 billion euros immediately and they will be recapitalized by the end of the year. The government insists this means there is no longer any danger that the banks may have to raid bank deposits to restore their financial health. The €86 billion [AU$129.86 billion] bailout package aims at recovering the dwindling economy and bringing it back to its own feet, even though much of its sovereignty would remain under the influence of the global creditors. In return, it must implement a series of budget measures, including spending cuts and yet more tax increases, just as it had to do for its previous two bailouts.