Greek PM signals deal on bailout

Greece and its creditors are negotiating a complex, three-year deal worth up to 86 billion euros ($93.6 billion) by August 20 when Athens has to repay 3.5 billion euros from existing debts to the European Central Bank (ECB).

Prime Minister Alexis Tsipras said an agreement on the bailout could also end uncertainty over Greece's place in the eurozone.

"We are in the final stretch. Despite the difficulties we are facing, we hope this agreement can end uncertainty on the future of Greece," Tsipras said on Wednesday.

Head of the European Commission, Jean-Claude Juncker, echoed Tsipras' comments saying "All the reports I am getting suggest an accord this month, preferably before the 20th."

Talks on the third bailout for Greece began at the end of July. Greece has to agree conditions for the loan with the EC, the ECB and the International Monetary Fund (IMF). Those conditions include controversial topics in Greece such as pension reform and a sweeping privatization program.

The European Union estimates that the Greek banking sector could need between 10 billion and 25 billion euros to recapitalize. The sector has been weakened by bad loans and five weeks of capital controls. Bank shares fell on the Athens stock market which reopened on Monday. Down 50 percent in the first two days of trading, bank stocks fell a further 27 percent on Wednesday.

The ECB is to carry out a comprehensive assessment of Greek banks, it said in a letter sent to the European Parliament and released on Wednesday. It said bailout funds could be used to cover any capital shortfall it found.

Loan term effects

The government in Athens has been under pressure from its own party members over the terms of the bailout.

In two votes on the bailout, Tsipras lost the support of up to 39 of his party members with several ministers resigning in protest at austerity measures.

Speaking on the radio on Wednesday, government spokeswoman Olga Gerovasili repeated the prime minister's warning of early elections in the autumn if Syriza party members continue to resist the proposed measures. The party holds a conference in September.

"Elections are likely in the autumn," Gerovasili told Vima radio. "It mainly depends on how steady this government can be in the coming period."

Tsipras will again rely on pro-European opposition parties in the vote for the bailout deal, which is expected to be put before the Greek parliament shortly before August 20.

On Wednesday, Tsipras suggested the European Parliament should be involved in the bailout process: "It should at some point be under the control and monitoring of the European Parliament, a democratic institution which has accountability," he said.

jm/jil (AFP, Reuters)