Greece reaches deal with eurozone leaders, avoiding euro exit and tourism fallout

BRUSSELS – After months of acrimony, Greece clinched a preliminary bailout agreement with its European creditors on Monday that will, if implemented, secure the country’s place in the euro and help it avoid financial collapse.

The deal will support the tourism industry which was suffering under capital controls and back closures – which could reopen as early as Wednesday – that made it difficult for tourists to access cash and use credit cards. In addition, the general uncertainty and negative headlines have been causing holidaymakers to think twice about heading to Greece.

The terms of the deal, however, will be painful both for Greeks and their radical left-led government, which since its election in January had vowed to stand up to the creditors and reject the budget cuts they have been demanding.

Greece needs another bailout, its third in five years, to dig itself from under a mountain of debt and to get its economy back on its feet after a six-year depression. Following months of inconclusive talks, its economy is now teetering on the edge of collapse – banks have been shut for two weeks and daily business has almost ground to a halt amid cash withdrawal limits.

Lack of access to cash was causing tourism chaos with some hotels in Northern Greece resorting to accepting the Bulgarian lev due to the lack of Euro liquidity in the market.

Before it can receive 85 billion euros ($95.07 billion) in loans and support for its banks to reopen, the Greek government will have to pass a raft of austerity measures that include sales tax increases and reforms to pensions and the labour market.

Greece will be on a tight timetable to implement its reforms – a reflection of how little its creditors trust the government to honour a deal. Greek Prime Minister Alexis Tsipras infuriated his European partners last month when he called for a popular vote against economic reforms the creditors has proposed.


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