Greek Bailout Deal

After some 17 hours of summit talks eurozone leaders announced a new deal to rescue Greece - a third bailout.
Euro zone leaders clinched a deal with Greece on Monday July 13,2015 to negotiate a third bailout to keep the near-bankrupt country in the euro zone after a whole night of haggling at an emergency summit

What is the European Stability Mechanism(ESM)?

• Eurozone's only permanent bailout fund - financed by all 19 member states
• Launched in Oct 2012, total lending capacity is €500bn
• Only lends if borrowing country agrees to fulfil strict economic conditions
• ESM made loans to rescue banks in Spain (€41.3bn) and Cyprus (€9bn)
• Germany is biggest ESM contributor (€190bn)
• Like IMF loans, ESM loans don't add to lenders' national debt
• ESM bailout takes at least three weeks to organise

The risk of Grexit - a Greek exit from the euro - has not gone away. So what are the key points of the deal?

• The Greek parliament must immediately adopt laws to reform key parts of its economy - by Wednesday. The reforms include: streamlining the pension system and boosting tax revenue - especially from VAT
• A commitment to liberalise the labour market, privatise the electricity network and extend shop opening hours
• The eurozone agrees in principle to start negotiations on a loan package for Greece worth €82bn-€86bn (£59bn-£62bn; $91bn-$96bn) spread over three years
• The loan will come mainly from the European Stability Mechanism (ESM) - the eurozone bailout fund. But the International Monetary Fund will also be asked to make a contribution from March 2016
• A new trust fund will be set up, managed by Greece, with €50bn of Greek assets. It is a mechanism for paying off part of the total ESM loan. Half of the €50bn will be used to fund recapitalisation of Greek banks, the other half will go towards reducing Greece's debt mountain - by privatising assets - and investing in Greece.
• Greece will get short-term bridge financing to avoid bankruptcy - separate from the ESM. The amount is estimated to be €7bn by next Monday and another €5bn by mid-August
• Out of the total ESM loan about €10bn will be used immediately to recapitalise Greek banks - but the banks may need €25bn in total
• The European Central Bank, eurozone finance ministers and the IMF will tightly monitor Greek compliance with the bailout conditions
• Negotiations on the ESM bailout will begin only after the plan is approved by the parliaments of Finland, Germany and Greece
• The eurozone is ready if necessary to extend the repayment period of Greek debt (by debt rescheduling), but debt will not be written off (so no "haircut")
• The European Commission will try to mobilise €35bn - outside the ESM loan - to help Greece with growth and job creation.