The talks about a third bailout for Greece were successfully concluded in Athens, and ahead of schedule. This is another chapter in the very long Greek drama.
EUR/USDÂ shoots higher and retakes the 1.10 level, trading just under 1.1040.
The deadline this time was August 20th, when Greece had a pending ECB payment. There are still some “minor issuesâ€, but both sides confirm an agreement.
Earlier there were concerns that talks are stuck and that Greece might need a second bridge loan before a more comprehensive deal could be reached.
Talks have been going on relatively quietly in recent weeks and that was a sign of progress. This is very different from what happened beforehand.
To recap: on the July 12-13 summit Greece was threatened to be kicked out of the euro-zone and surrendered. It was forced to pass some laws in parliament as “prior actions†to get a bridge loan that would allow talks on a third bailout.
These talks seem to be concluded now.
Will the deal succeed? That’s a totally different question. The sides agreed on a primary surplus targets:
- It will be -0.25% in 2015 (a deficit)
- +0.5% in 2016
- +1.75% in 2017
- 3.5% in 2018
A primary surplus is the level of income minus expenses, whereas expenses don’t include interest payments. The 3.5% target is quite ambitious.
In addition, the notion that Greece can pay back all its debt also doesn’t make sense to the vast majority of economists and to all those involved in the talks.
Here is how it looks on the chart:
