Bloomberg obtained a copy of the draft agreement Greece has negotiated with the International Monetary Fund, European Union, and European Central Bank.As far as we can tell, this so-called troika won all their battles.
Here are a few of the major points from the draft (via BBG terminal headlines):
- Greece’s 2012 GDP will shrink by as much as 5%.
- Greece is expected to return to growth in 2013.
- Greece will cut 15,000 in state jobs in 2012.
- Minimum wage will be cut by 20 per cent.
- There will be no increase to sales tax.
- The government will cut medicine spending will fall from 1.9% to 1.5% and merge all auxiliary pension funds.
- It will also sell stakes in six companies—in particular, energy companies and refineries.
Markets have ticked up slightly since the announcement.
These are more or less the same provisions they’ve been discussing all year, however a draft agreement suggests that politicians from all parties of the ruling coalition have finally conceded that they need to bite the bullet and accept more austerity.
This deal would mark a close to just one of the series of negotiations that have been taking place in Athens recently. Talks between Greece and its private sector creditors about the terms of an orderly debt restructuring are still ongoing.
There appears to be no mention of any increase in funding to Greece—a troubling sign since the country reportedly found a shortfall in funding for the year amounting to €15 billion ($19.9 billion) that it will not be able to pay off even with the €130 billion ($172 billion) it is already set to receive from the troika.