Tsipras can now begin working with Greece’s European creditors to get an actual bailout, and actual funding, back to the Greek economy, which has basically been shuttered in the last 2 and a half weeks.
This package, which was agreed to in the pre-dawn hours of Monday following weekend-long negotiations in Brussels, is viewed as inferior to what Greece walked away from back on June 26 when Tsipras called a referendum on the package.
(On Wednesday, former Greek finance minister Yanis Varoufakis walked through a step-by-step breakdown of why the package is terrible.)
Greece will now be required to implement a series of reforms, target specific budget surpluses, and submit to oversight from its creditors.
Of course, this package being passed in Greek parliament still seems up in the air, particularly since the IMF — which Greece’s European partners are counting on as part of the deal — has in recent days indicated that it believes Greece’s current debt burden is unsustainable, technically making the fund ineligible to contribute.
The package Greek parliament approved on Wednesday night does not include debt relief, which the IMF’s report indicated will likely be needed in Greece, and was also the major sticking point between Greece and its creditors over the last 6 months of negotiations.
And so while Greece is far from out of the woods, a few things are likely to happen in the next few days and weeks.
The European Central Bank is likely to either raise its emergency liquidity assistance (ELA) to Greece, or through other means provide Greece’s banking system with fresh liquidity.
This will allow Greek banks to open at some point soon — they have been closed for over 2 weeks — and get Greece on a path to lifting capital controls that have restricted how much money can be withdrawn from Greek banks.
The Athens Stock Exchange, which has also been closed, is likely to get on the path to re-opening, and Greece will begin to work towards the 50 billion euro privatization that the draft agreement calls for.
As we’ve reported, this fund seems like a massive challenge for the Greek government.
Earlier on Wednesday as parliament’s debate was getting underway, protests broke out in Athens, and so it’s clear that for at least some — if not many, Greece did vote against a similar bailout package 10 days ago — this deal is not acceptable.
And so while Greece has taken a first step towards securing its third big European bailout in 5 years, there is a still a long way to go.
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