European Union agrees to lend Euro 86 billion to Greece

European Union agrees to lend Euro 86 billion to Greece

European Union finance chiefs have agreed to lend _86 billion to Greece on strict bailout conditions. Greek Prime Minister and his cabinet have agreed to strict conditions imposed by the European leaders despite the protests faced by the government in Greece. Greece was under tremendous pressure as the country deals with the worst financial crisis it has faced in decades.

Greek banks will receive a capital injection of _10 billion within few days to keep the liquidity at healthy levels in the banking system. Greek government will receive _13 billion by Thursday from the European Union.

European Union will again check Greek government's compliance with the terms of the current bailout in October. The first tranche of _26 billion will be released this month. Greek government will have to announce severe budget cuts and will have to go ahead with privatization of several segments in the country.

International Monetary Fund would require more assurances and details on Greek reforms, notably to pensions. IMF team will also ascertain if the Greek debt was sustainable.

Last Friday, Greek Finance Minister Euclid Tsakalotos said, "After six months of very difficult negotiations with lots of ups and downs, we finally have an agreement."

Some German politicians including Wolfgang Schäuble were pressing European Union to consider Greek exit if the country failed to make the reforms as per the conditions laid-out by the European Union.

"After the changes in the government and the crises that we had, the cooperation with, let's say, the changed Greek government is very constructive, very well organised," Mr Jeroen Dijsselbloem, the Dutch minister who chaired the Brussels meeting.

For the moment, Greece should be stable and Euro has also gained slightly against other currencies. Only in October, it will be seen if the Greek government has delivered what it promised to the European leaders.

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