Alexis Tsipras wants the Greek parliament to reconvene to vote on the bailout deal that has been roughly agreed with creditors. Photograph: Orestis Panagiotou/EPA
Greece’s stock market rallied on news that the indebted country and its creditors have reached an outline agreement over an €86bn (£61bn) bailout.
Athens’ benchmark ATG equity index closed up 2.1%, while the country’s banking index also climbed 3%, although they remain down 15% and nearly 70% respectively since the start of 2015. Under the terms of the bailout the country’s struggling banks would get an immediate €10bn and be recapitalised by the end of 2015, meaning “absolutely no risk of a haircut on deposits”, a government statement said.
Greece’s prime minister, Alexis Tsipras, on Tuesday called an emergency session of parliament to vote on the country’s third financial rescue in five years.
The government said Tsipras had requested an end to parliament’s summer recess hours after all-night talks produced broad agreement between Greek negotiators and the country’s main creditors on the key terms of the package.
“The crucial nature of the situation requires the immediate convening of parliament to proceed with the deal’s approval and allow disbursement of the first instalment,” Tsipras said in a letter to the parliamentary speaker.
He said he wanted a draft law on the deal discussed in committee on Wednesday so it could be ratified by a full parliamentary vote on Thursday and – all being well – approved at a meeting of eurozone finance ministers scheduled for Friday.
The tight schedule is essential if the first tranche of the aid package is to be disbursed in time for Greece to make a €3.2bn debt payment to the European Central Bank due on August 20.
If approved, the agreement will bring to a close a bruising round of aid talks for Greece that began in January with the election of Tsipras’s leftist Syriza party, which swept to victory on a passionate anti-austerity platform.
But the government has been forced into a policy U-turn that will entail the imposition of yet more spending cuts among a series of other austerity measures, leaving some of its supporters bitter. By accepting the harsh terms of the agreement, critics say, Syriza has compromised most of the principles it stands for.
“Leftwing governments should take leftwing actions,” said Costas Lapavitsas, a leading member of a bloc of dissident Syriza MPs who have described the package as a “noose around the neck of the Greek people”.
Lapavitsas said he would be among several dissenters not voting in favour of the new legislation on Thursday, and Tsipras will need the continued support of opposition parties to pass 35 fiscal and other measures required before the bailout can fully kick in.
Besides the sale of some state property and further cuts to pensions, military spending and tax credits for vulnerable people, these include energy market deregulation, changes to tonnage tax for shipping firms, price cuts in generic drugs, a review of the social welfare system, phasing out early retirement, and market reforms proposed by the Organisation for Economic Cooperation and Development (OECD).
Greece has relied on bailouts totalling €240bn from eurozone member states and the IMF since 2010, with successive governments being forced in exchange to implement increasingly punishing spending cuts, tax rises and reforms. While budget overspending has been significantly reduced, the austerity measures have plunged the country into a deep downturn and pushed unemployment to a record high of around 26%.
Figures scheduled to be published next week are expected to confirm that the country’s recession worsened in the second quarter. The government insisted it had won key concessions in the deal, pointing to a deficit target of 0.25% this year, followed by a surplus of a 0.5% next year, which it said was less ambitious than creditors had originally demanded and would spare Greece €20bn of budget cuts.
“This practically means that with the current agreement, there will be no fiscal burden – in other words new measures in the immediate future,” the government statement said.
But mounting discontent particularly within his own party, which now has only a nominal majority in parliament, has fuelled speculation that Tsipras will call early elections once the new deal is signed, possibly in the autumn. The youthful prime minister retains a strong personal approval rating and polls suggest Syriza would comfortably win any new election.
Meanwhile, one fund manager said one of the key measures, a €50bn privatisation programme, could attract investors.
“While institutional investors may be a little shy of investing in Greece in the very near future, the world is full of capital seeking out distressed opportunities and the proposed Greek privatisation programme may well provide an appropriate way to incentivise capital to re-enter the country,” said Ali Miremadi, fund manager at London-based Taube Hodson Stonex Partners.