Greece promises greater austerity to secure bailout funds

Divides remain between the EU and the IMF...

Greece promises greater austerity to secure bailout funds

Petros Giannakouris / AP

Greece has paved the way for the next phase of its international bailout, it has agreed to implement controversial pension cuts and cuts in other social payments. It will also increase some taxes, in exchange for the transfer of the next payment from its €86bn bailout.

"There was white smoke ... the negotiation has finished with agreement on all the issues," its Finance Minister, Euclid Tsakalotos said earlier this morning.

A preliminary deal was reached after six months of negotiations. These fresh austerity measures will be introduced during 2019 and 2020.

The European Stability Mechanism said in a statement, "Staff teams from the European Commission, ESM, European Central Bank and the IMF have reached a preliminary agreement with the Greek authorities on a policy package to support the recovery in Greece, and which will be the basis for concluding the second review of the ESM stability support programme."

It added that these measures will be paired with, "further discussions in the coming weeks on a credible strategy for ensuring that Greece’s debt is sustainable."

The IMF has said that it will not take part unless the Greeks receive debt relief as it believes its current level is unsustainable.

This deal is expected to be approved at May 22nd's Eurogroup meeting.

The terms need to be agreed by the Greek parliament where the Syriza / Independent Greeks coalition holds a three-seat majority.

Greece faces a €6bn debt repayment next month.