Greece and creditors close in on bailout deal

11 Aug 15

Greece and its creditors have agreed the substance of a multi-billion bailout deal to avert bankruptcy and keep the country in the eurozone, according to Greece’s finance minister Euclid Tsakalotos. 

“Finally, we have white smoke. An agreement has been reached. Some minor details are being discussed right now,” Reuters quoted Tsakalotos saying this morning following a 23-hour session on the terms of the deal.  

Tsakalotos confirmed, however, that “two or three small issues” were pending with its international creditors.

Cash-strapped Greece needs to strike a deal by 20 August, when it must repay around €3bn to the European Central Bank.

The marathon meeting between Tsakalotos, economy minister Giorgos Stathakis, the ECB, the International Monetary Fund and the European Stability Mechanism agency, aimed to finalise the list of reforms required of Greece in an exchange for the three-year €86bn lifeline.

Back in July creditors agreed to discuss a bailout deal that would keep Greece afloat and in the eurozone. Greece then committed to implement major reforms including scrapping early retirement, increasing VAT on all goods and services and ending the VAT discount.

Also discussed in July were plans for the country to set up a new privatisation fund and bad loans made by Greek banks. These two issues remain obstacles in the negotiations, according to officials.

Emerging from all-night talks at a central Athens hotel, officials were quoted saying that they expect the agreement to be approved by Greece’s parliament on Wednesday or Thursday and then vetted by eurozone finance ministers on Friday.

With talks set to continue on how to reduce Greece’s debt, commonly cited as 175%-180% of GDP, Ian Ball, CIPFA’s international chair, argued that adoption of international accounting standards could change the world’s view of Greece.

“Greek debt, calculated on an IPSAS basis is significantly lower, and at the end of 2013 was 68% of GDP,” Ball said.

“If this is not an appropriate method for measuring debt then every company on major stock exchanges around the world has got its debt measurement wrong. In neither accounting standards nor economic principle is debt measured at face value.

“This pervasive misunderstanding of Greece’s real fiscal position has seen agreements reached between Greece and its creditors which do not address the real problem and instead may actually intensify it.”

He suggested that Greece and its creditors needed to confront the “actual position” and start afresh in finding solutions to the problems afflicting the Greek economy.

Read the full Would IPSAS help Greece? article, by Ian Ball here.


  • Judith Ugwumadu
    Judith Ugwumadu

    Judith writes about public finance, public services and economics across Public Finance International and Public Finance. She previously undertook reporting stints at Financial Adviser, Global Security Finance and The Sunday Express.

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