Greece reached a deal with its European creditors Monday after a Marathon all-night summit in Brussels.
The agreement paves the way to a third bailout, if the Hellenic Parliament approves tough austerity measures.
These include pension reforms, economy liberalization (from Sunday opening hours to opening up closed professions), privatizations, labor market reforms (including new rules on industrial action, and collective dismissals), and action on non-performing loans.
The seven page document states that the Hellenic Parliament have until Wednesday to pass laws that:
* Take steps to ensure the independence of Greece's statistics office is maintained.
* Implement VAT hikes: Greece will keep VAT on hotels at a 13% rate but will raise VAT on restaurants to a maximum rate of 23% and eliminate discounted rates for islands, apart from the most remote ones.
* Cut pensions: Athens conceded in implementing measures to raise the effective retirement age to 67 by 2022, increase contribution for medical care to 6%, merge social security funds, and phasing out a “solidarity grant” (EKAS) to the poorest retirees between March 2016 and the end of 2019.
* Liberalize the labor market: Athens must undertake rigorous reviews and modernization of collective bargaining, industrial action and, in line with the relevant EU directive and best practice, collective dismissals, along the timetable and the approach agreed with the Institutions. On the basis of these reviews, labor market policies should be aligned with international and European best practices, and should not involve a return to past policy settings which are not compatible with the goals of promoting sustainable and inclusive growth.
*Adopt more ambitious product market reforms and open up closed professions: Sunday trading laws will be relaxed, and even milk producers, pharmacists, and bakers will be deregulated.
*Develop a significantly scaled up privatization program: Greece must sell the state's remaining shares in the electricity transmission network operator (ADMIE) and in the dominant telecommunications provider (OTE). The agreement also includes privatization of regional airports and seaports.
The biggest change to the wording relates to a new independent privatization fund which will monetize valuable assets through privatizations and other means. The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of €50bn of which €25bn will be used for the repayment of recapitalization of banks and other assets and 50% of every remaining euro will be used for decreasing the debt to GDP ratio and the remaining 50% will be used for investments.
While the summit agreement averted a worst-case outcome for Greece, it only established the basis for negotiations on a 86 billion euros of aid the over three years, which would also include 25 billion euros to recapitalize its weakened financial system.
Emerging from the summit, Greek Prime Minister Alexis Tsipras admitted it had been tough:
"We found ourselves before difficult decisions, tough dilemmas. We took the responsibility of the decision in order to avert the implementation of the more extreme aims (of) the more extreme conservative circles in the European Union." Tsipras said and insisted that he had won concessions on debt relief (sometime in the future) as well as the medium-term funding plan.
He also managed to persuade the euro zone that the new independent privatization fund, would be based in Athens not Luxembourg.
The Greek PM is due to meet with his junior coalition partner and defense minister later this evening.