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Greece Reaches Deal to Release Foreign Rescue Funds Greece Reaches Deal to Release Foreign Rescue Funds
(35 minutes later)
ATHENS — After seven months of faltering negotiations, Prime Minister Antonis Samaras said on Tuesday that Greece had reached a deal with its foreign lenders on economic reforms necessary to unlock billions of euros in crucial rescue funding. He also pledged to distribute €500 million to one million Greeks hit hardest by the country’s economic crisis. ATHENS — After seven months of faltering negotiations, Prime Minister Antonis Samaras said on Tuesday that Greece had reached a deal with its foreign lenders on economic reforms necessary to unlock billions of euros in crucial rescue funding. He also pledged to distribute 500 million euros to one million Greeks hit hardest by the country’s economic crisis.
“The long negotiations with the troika have been completed successfully,” Mr. Samaras said in a televised news conference. “United, the government achieved its mission.”“The long negotiations with the troika have been completed successfully,” Mr. Samaras said in a televised news conference. “United, the government achieved its mission.”
He said his administration would honor a pledge to give a portion of a projected primary surplus — a budget surplus after debt payments — to “recompense the massive sacrifices of the Greek people.” Members of the police and security forces on low salaries would be among the beneficiaries of the immediate delivery of the €500 million, or $695 million.He said his administration would honor a pledge to give a portion of a projected primary surplus — a budget surplus after debt payments — to “recompense the massive sacrifices of the Greek people.” Members of the police and security forces on low salaries would be among the beneficiaries of the immediate delivery of the €500 million, or $695 million.
Mr. Samaras added that €20 million would go toward covering the needs of the rising number of Greece’s homeless and that the state would repay €2.8 billion in debts to suppliers in the private sector this year, €1 billion more than the amount budgeted. An additional €1 billion would go toward reducing Greece’s debt burden.Mr. Samaras added that €20 million would go toward covering the needs of the rising number of Greece’s homeless and that the state would repay €2.8 billion in debts to suppliers in the private sector this year, €1 billion more than the amount budgeted. An additional €1 billion would go toward reducing Greece’s debt burden.
There was no immediate statement by Greece’s so-called troika of international creditors: the European Commission, the European Central Bank and the International Monetary Fund. But Simon O’Connor, a commission spokesman, said at a Brussels news briefing that policies had been agreed to and that a “technical level agreement” would be completed during the day.There was no immediate statement by Greece’s so-called troika of international creditors: the European Commission, the European Central Bank and the International Monetary Fund. But Simon O’Connor, a commission spokesman, said at a Brussels news briefing that policies had been agreed to and that a “technical level agreement” would be completed during the day.
The troika’s audit started last September but dragged on because of disagreements over the extent of austerity measures Greece must impose to meet the terms of its international bailout and secure some €10 billion in pending rescue loans that Greece needs to pay down bonds that are due to expire in May. The troika has extended Greece two bailouts worth €240 billion since 2010. The troika’s audit started last September but dragged on because of disagreements over the extent of austerity measures Greece must impose to meet the terms of its international bailout and secure €10 billion in pending rescue loans that Greece needs to pay down bonds that are due to expire in May.
The troika has extended Greece two bailouts worth €240 billion since 2010.
Greece and the troika agreed to reduce the social security contributions paid by employers and workers by 3.9 percentage points, a measure aimed at helping struggling businesses and lifting wages, the prime minister said.Greece and the troika agreed to reduce the social security contributions paid by employers and workers by 3.9 percentage points, a measure aimed at helping struggling businesses and lifting wages, the prime minister said.
A series of structural, growth-oriented reforms aimed at increasing competitiveness will also be enforced, Mr. Samaras said, although he did not provide details of those changes. Greece has agreed to various austerity measures like cuts to public sector salaries and pensions as well as tax increases, including a fivefold rise in property taxes.A series of structural, growth-oriented reforms aimed at increasing competitiveness will also be enforced, Mr. Samaras said, although he did not provide details of those changes. Greece has agreed to various austerity measures like cuts to public sector salaries and pensions as well as tax increases, including a fivefold rise in property taxes.
Finance Minister Yannis Stournaras, who has coordinated the talks between the troika and Greek government officials, said the review was the toughest hurdle Greece had cleared since it signed its first loan deal in 2010.Finance Minister Yannis Stournaras, who has coordinated the talks between the troika and Greek government officials, said the review was the toughest hurdle Greece had cleared since it signed its first loan deal in 2010.
“It has been a very, very difficult seven months — the hardest review yet,” he said at the joint briefing with Mr. Samaras.“It has been a very, very difficult seven months — the hardest review yet,” he said at the joint briefing with Mr. Samaras.
A key point of contention was the size of a projected primary surplus and what should be done with it. Greece puts the surplus at €2.9 billion for this year, but Eurostat, the European Union’s statistical agency, is scheduled to issue an official estimate in April. A crucial point of contention was the size of a projected primary surplus and what should be done with it. Greece puts the surplus at €2.9 billion for this year, but Eurostat, the European Union’s statistical agency, is scheduled to issue an official estimate in April.
The Greek government, which is bracing for European Parliament and local elections in May, wanted to give the surplus to austerity-weary citizens. Mr. Samaras hinted last year at such benefits, which are believed to have been opposed by foreign auditors. But local news reports also indicated that the auditors were concerned about the possible political impact on the fragile Greek coalition if those promises were revoked two months before local elections, leading to possible gains for anti-bailout parties. The Greek government, which is bracing for European Parliament and local elections in May, wanted to give the surplus to austerity-weary citizens. Mr. Samaras hinted last year at such benefits, which foreign auditors are believed to have opposed.
Other sticking points in the talks were related to a series of competition-enhancing measures set out in a report by the Organization for Economic Cooperation and Development. Athens accepted the bulk of the proposed measures but rejected demands to allow Greek supermarkets to sell over-the-counter medicines, which are now available only in pharmacies. But local news reports also indicated that the auditors were concerned about the possible political impact on the fragile Greek coalition if those promises were revoked two months before local elections, leading to possible gains for anti-bailout parties.
Greece also resisted troika demands that mass layoffs in the private sector be made easier, arguing that the effort to encourage competitiveness would worsen unemployment, already at record levels. Foreign auditors are also believed to have dropped demands for 2,000 more layoffs in the Greek civil service, in addition to the 15,000 layoffs scheduled for 2013 and 2014.
The next step is for the agreed reforms to be bundled into legislation and voted through Parliament. That will not be easy with the government’s narrow majority — three seats in a 300-member Parliament — and the austerity fatigue now felt by many lawmakers.
A separate bill outlining the continuing recapitalization of Greece’s struggling banks, which received €28 billion in capital last summer, is also due to go to Parliament in the coming days. A dispute between Greece and the troika on the capital needs of Greek banks had been another point of contention. But that is expected to be resolved when the European Central Bank determines capital needs through its stress tests on European banks later this year.
Syriza, the main left-wing opposition party, which opposes the terms of Greece’s bailouts, scorned the government’s promise for handouts to Greeks on low incomes, saying Mr. Samaras was offering “peanuts” to win votes after years of austerity measures that have slashed living standards.
The leftists have dismissed the government’s claims that Greece will return to bond markets this year, claiming that such a move is impossible without a restructuring of Greece’s debt burden. Athens hopes that talks to lighten its debts can begin later this spring, once Eurostat confirms Greece’s projected primary surplus. European officials have indicated that such a debate will not be discussed before summer.