AFTER months of acrimony, Greece finally clinched a bailout agreement with its European creditors yesterday that will, if implemented, secure the country’s place in the euro and avoid financial collapse.

    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.

    Before it can get 85 billion euros (US$95.07 billion) in bailout cash and support for its banks to reopen, the Greek Government will have to pass a raft of austerity measures that include sales tax increases, reforms to pensions and labor market reforms.

    Greece will be on a tight timetable to implement its reforms — a reflection of how little its creditors trust the government to honor a deal.

    “Trust needs to be rebuilt,” said German Chancellor Angela Merkel, adding that with the deal “Greece has a chance to return to the path of growth.”

    In a first step toward getting its bailout loans, the Greek Government has to pass a set of measures into law by tomorrow.

    Measures include an increase in the sales tax and reform of the pension system. In later weeks, Greece will have to open to competition industries that have long been protected, such as the energy sector. Labor laws will be made more flexible.

    If it meets these requirements, Greece will get a three-year rescue program and a commitment to restructure its debt, which is unsustainably high at around 320 billion euros, or around 180 percent of annual GDP.

    The creditors said they would help Greece in the short-term deal with its debt repayments since any bailout agreement was not imminent. Greece will need help making a 4.2 billion euro debt repayment July 20. It is also in arrears on about 1.5 billion euros owed to the International Monetary Fund since June 30.

    If the talks had failed, Greece could have faced bankruptcy and a possible exit from the euro, the European single currency that the country has been a part of since 2002. No country has ever left the joint currency, which launched in 1999, and there is no mechanism in place for one to do so.

    Greece has received two previous bailouts, totaling 240 billion euros, in return for deep spending cuts, tax increases and reforms from successive governments. Although the country’s annual budget deficit has come down dramatically, Greece’s debt burden has increased as the economy has shrunk by a quarter.(SD-Agencies)