Greece and its international creditors said on Tuesday that they had reached a preliminary deal allowing the country to receive crucial bailout payments in exchange for promises to raise taxes and to further cut pensions and social spending.
The agreement — the culmination of months of talks — paves the way for the transfer of more than 7 billion euros, of emergency funds to Athens. It also comes before a series of elections in France, Britain and Germany in the coming days and months, with European officials eager to avoid giving fuel to far-right parties.
Under the terms of the agreement, which is subject to the approval of eurozone finance ministers and the Greek Parliament, Athens will make changes to its labor and energy markets, cut pension payouts, and increase taxes. As part of the deal announced on Tuesday, Athens agreed to raise the equivalent of 2 percent of gross domestic product by cutting pensions further in 2019, and increasing tax receipts by reducing the income threshold at which taxes must be paid.
The government must now draft legislation bundling together all the measures and push it through Parliament before eurozone finance ministers meet on May 22. If the measures are enacted, eurozone finance ministers — collectively known as the Eurogroup — are expected to approve the disbursal of bailout funds for Athens to make a debt payment that is due in July.
The European currency was slightly higher on the news as it reduced a possibility of another Greek drama. The last time it happened (in 2015) the currency and European indices suffered. However, as for now it seems that Greece won’t be a problem in the near future.
EURUSD remains above 1.0850, a crucial level of support (and a broken resistance). The news from Greece pushed the cross above 1.0910, but a greater move is unlikely ahead of the FOMC rate decision due tomorrow. source: xStation5