Greece and its international creditors on Tuesday reached agreement on the terms of the country’s new bailout program, which if ratified by other eurozone countries could unlock up to €86 billion ($94.76 billion) of financing over the next three years.
An agreement “in principle” between the creditors and the Greek government was concluded early Tuesday, although some minor details remain outstanding, said a spokeswoman for the European Commission, one of the institutions negotiating the terms of the new bailout in Athens. Her comments followed similar remarks from a Greek official.
Greece needs to secure new funds to avoid defaulting on €3.2 billion in bonds owed to the European Central Bank by Aug. 20.
The commission spokeswoman declined to comment on the contents of the agreement or the elements of the deal that still have to be agreed. She also stressed that the technical-level deal still needed approval from eurozone governments.
“What we don’t have at the moment is a political agreement,” she said.
European Commission President Jean-Claude Juncker spoke to German Finance Minister Wolfgang Schäuble and Greek Prime Minister Alexis Tsipras on Monday and will speak to German Chancellor Angela Merkel and French President François Hollande later Tuesday, the spokeswoman said.
Tuesday afternoon, senior officials from European Union finance ministries will also hold a phone conference to discuss the agreement between Greece and the institutions.
If the call goes well, eurozone finance ministers are likely to meet in Brussels on Friday to approve the agreement. It then needs to be voted on in several national parliaments, including in Germany.
The other institutions involved in the talks—the European Central Bank, the IMF and the eurozone bailout fund—didn’t immediately comment.
Greek officials said they plan to submit a bill on overhaul and spending measure required by the agreement to parliament Tuesday evening and run it past a parliamentary economic committee Wednesday before holding a final vote on the bailout Thursday.
The breakthrough in negotiations, which have lasted for weeks, came after a session of talks that ran for more than 18 hours into Tuesday morning.
A Greek government official said that Athens and its creditors agreed that Greece should target a primary budget deficit of 0.25% of economic output for 2015, followed by a 0.5% surplus next year, and then growing to 1.75% in 2017. By 2018, Greece’s primary surplus has to reach 3.5%, the official said. A country’s primary budget balance strips out interest payments on government debt.
The official also said differences on Greece’s privatization plans and how to handle nonperforming loans—major sticking points in the bailout talks—had been overcome and that the outstanding details relate the overhaul measures Greece must complete to unlock the first slice of the aid.
The exact involvement of the IMF is also unclear.
IMF staff also signed off on the tentative deal, the commission spokeswoman said. But the Washington-based fund has said it can’t commit to new rescue loans until eurozone governments have taken steps to reduce Greece’s debt load and the government in Athens has demonstrated that it is serious about implementing the promised overhauls and budget cuts. Eurozone governments have said they would examine the debt issue in the fall.
Earlier Tuesday, German Deputy Finance Minister Jens Spahn said the German government and the lower house of parliament, which would have to approve the deal, would examine a possible agreement “calmly.”
“It’s something that must hold,” said Mr. Spahn on ARD breakfast television. “Negotiations have to be done thoroughly.”
He said the agreement had to hold beyond the Aug. 20 deadline, when the ECB bonds are due. “It must hold for three years and not for three days,” he said.