Valdis Dombrovskis, the European Commission vice-president responsible for the Euro and social dialogue, confirmed on 14 August: “I would like to welcome today’s Eurogroup agreement on a new three-year ESM programme for Greece.

“This is the result of intense work over the past month between the Greek authorities and the [creditor] institutions – the European Commission, the European Central Bank, the International Monetary Fund and the European Stability Mechanism agency.”

As part of the five-year bailout agreement, Greece is expected to increase taxes and make tough spending cuts.

The country will also undertake an ambitious reform of the pension system to ensure sustainability, efficiency and fairness, the Eurogroup said in a statement.

The country has also committed to key labour and product market reforms to open up the economy to investment and competition, as well as to modernise and depoliticise the public sector.

Moreover, steps will be taken to tackle non-performing loans in the banking sector.

The total amount of the programme is up to €86bn. This includes a buffer of up to €25bn for any potential bank recapitalisation or resolution.

Dombrovskis added: “Of course, the agreement is not just about financing; it is also about the important structural reforms which are necessary to secure economic recovery, financial stability and to return to job creation and investment.”