Greece’s bailout deal moves step closer

Agreement with creditors could be concluded as early as this week

Greece has expressed hope that intensive talks with international creditors over another financial lifeline for the country could be concluded this week, earlier than expected.

The discussions, which started in late July, have made progress, though officials from the EU were less optimistic than their counterparts in Athens about the likelihood of a deal being concluded this week. Germany, for one, has stressed the importance of being thorough in the complicated negotiations.

Hopes that a swift resolution will pave the way for the Greek parliament to ink the deal helped shore up Greek shares. The main index in Athens was up more than 2% in trading yesterday.

The Greek government needs the deal to be sorted out by August 20 when the country has a debt repayment of a little over €3bn to make to the ECB. Greece will not be able to make that payment without funds emerging from the country’s third bailout in just over five years.

Annika Breidthardt, European Commission spokeswoman on economics and financial affairs, said experts are “working day and night” to finalise the text of the formal agreement and an additional list of prior actions which the Greek authorities could legislate shortly.

“Progress has indeed been made and we expect further progress throughout the day and beyond as talks continue to resolve the remaining issues,” she said.

“A deal... can be reached in the month of August, preferably before the 20th of August.”

Greece has relied on international bailouts worth a total €240bn since it lost market confidence and was unable to borrow from anyone else in 2010.

To secure funds from the bailouts, successive governments have had to implement a series of spending cuts, tax hikes, and reforms. While the austerity has reduced budget overspending, the measures compounded a deep recession and fuelled record high unemployment.

While Greece’s parliament ratified further tax hikes and reforms, a rebellion by hardline left-wingers has left Prime Minister Alexis Tsipras’ Syriza party with only a nominal parliamentary majority and dependent on opposition backing to pass key creditor-demanded legislation. That has stoked talk that Tsipras will call early elections soon after the bailout deal is signed. Tsipras still retains strong personal support in opinion polls, which show Syriza heading for a potentially big victory.

A Greek government official said the hope is that a deal that “covers everything” will be concluded as soon as possible and indicated that one could be imminent by Friday, when he said a meeting of the eurozone’s 19 finance ministers could take place.

The official said any talk of elections must follow the agreement, with whatever provisions it may contain on lightening the country’s crushing debt load.