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Third Greece bailout: What are eurozone conditions? Third Greece bailout: What are eurozone conditions?
(8 days later)
The details of a third bailout for Greece - worth about €85bn (£61bn; $95bn) - have been hammered out and now it requires approval by the Greek parliament and eurozone governments. Greece is now receiving much-needed funding from a third eurozone bailout - worth about €85bn (£61bn; $95bn).
As in the previous bailouts, Greece's EU partners have set tough conditions, demanding more austerity. As in the previous bailouts, Greece's EU partners set tough conditions, demanding more austerity.
So Prime Minister Alexis Tsipras still has an uphill battle, first to get the Memorandum of Understanding (MoU) adopted and then to make the difficult reforms happen. But there is political uncertainty again, after Prime Minister Alexis Tsipras called a snap election, because MPs rebelled inside his Syriza party. Twenty-five members broke away to form a new left-wing party, Popular Unity, opposed to the bailout.
He faces dissent in his leftist Syriza party and must rely on support from opposition parties. The lenders are anxious to ensure there is no backtracking on the reforms that Greece must fulfil under the Memorandum of Understanding (MoU) - the official name for the bailout.
Syriza was elected in January on an anti-austerity platform. But Mr Tsipras agreed to the lenders' demands as the price for keeping Greece in the euro.Syriza was elected in January on an anti-austerity platform. But Mr Tsipras agreed to the lenders' demands as the price for keeping Greece in the euro.
The MoU requires Syriza to repeal some laws that it enacted in defiance of the austerity agenda.
What are the immediate priorities?What are the immediate priorities?
The MoU demands "prior actions" which Greek MPs must make law immediately if the eurozone finance ministers - the Eurogroup - are to give the whole package the green light. The MoU demands "prior actions" which Greek MPs must make law immediately.
The Eurogroup meets on Friday, and the next crunch deadline for Greece is 20 August, when it must repay about €3.2bn to the European Central Bank (ECB). The prior actions are aimed at boosting budget revenue and call on the government to:
The prior actions, seen by the BBC, are aimed at boosting budget revenue and call on the government to:
Tsipras risks red lines in eurozone bailout deal
What are the key economic targets?What are the key economic targets?
The bailout aims to: put privatisation back on track, modernise and slim down the state administration, tackle tax evasion and fraud, open up regulated professions to competition, and cut pension costs to make the welfare system sustainable.The bailout aims to: put privatisation back on track, modernise and slim down the state administration, tackle tax evasion and fraud, open up regulated professions to competition, and cut pension costs to make the welfare system sustainable.
It is a three-year bailout programme (2015-2018), to be provided in instalments by the EU's main bailout fund, the European Stability Mechanism (ESM). It is based on an outline agreement reached at a special EU summit on 13 July.It is a three-year bailout programme (2015-2018), to be provided in instalments by the EU's main bailout fund, the European Stability Mechanism (ESM). It is based on an outline agreement reached at a special EU summit on 13 July.
The wide-ranging MoU sets deadlines for the many economic reforms required. At every stage the Greek government will have to consult closely with the lenders.The wide-ranging MoU sets deadlines for the many economic reforms required. At every stage the Greek government will have to consult closely with the lenders.
The MoU recognises "the need for social justice", so that "the burden of adjustment is borne by all parts of society". However, it does not offer debt relief - despite Syriza's argument that Greece's crippling debts are unsustainable.The MoU recognises "the need for social justice", so that "the burden of adjustment is borne by all parts of society". However, it does not offer debt relief - despite Syriza's argument that Greece's crippling debts are unsustainable.
There will be no discussion of debt relief until after the lenders' first review in October.There will be no discussion of debt relief until after the lenders' first review in October.
The Greek government is required to achieve a primary budget surplus (a surplus minus interest payments) of 3.5% of GDP by 2018. The targets to reach that are: a 0.25% deficit this year, 0.5% surplus in 2016 and 1.75% surplus in 2017.The Greek government is required to achieve a primary budget surplus (a surplus minus interest payments) of 3.5% of GDP by 2018. The targets to reach that are: a 0.25% deficit this year, 0.5% surplus in 2016 and 1.75% surplus in 2017.
Those targets are tough - but not as tough as originally envisaged, because the Greek economy is expected to shrink by 2.3% this year. It has spent most of the past seven years in recession.Those targets are tough - but not as tough as originally envisaged, because the Greek economy is expected to shrink by 2.3% this year. It has spent most of the past seven years in recession.
Greek economy returns to growthGreek economy returns to growth
What about the banks?What about the banks?
Greece's banks remain in a fragile state - they depend on emergency ECB funding and cannot borrow in capital markets.Greece's banks remain in a fragile state - they depend on emergency ECB funding and cannot borrow in capital markets.
Strict capital controls remain in force - Greeks are limited to withdrawing €420 a week from their accounts.Strict capital controls remain in force - Greeks are limited to withdrawing €420 a week from their accounts.
The banks were closed for three weeks last month to prevent a bank run by anxious customers, who feared economic meltdown and "Grexit" - exit from the euro. The controls put a severe brake on economic activity. The banks were closed for three weeks in June-July, to prevent a bank run by anxious customers, who feared economic meltdown and "Grexit" - exit from the euro. The controls put a severe brake on economic activity.
Under the new bailout terms, Greek banks are to get €10bn, aimed at recapitalising them by the end of the year. Under the new bailout terms, Greek banks are getting €10bn, aimed at recapitalising them by the end of the year.