Greece and Europe reach bailout accord

High-profile European ministers have struck a last-minute deal that includes "serious reforms and financial support" after an all-night negotiation session.

Prime minister Alexis Tsipras surrendered to European demands for immediate action to qualify for up to €86 billion ($95 billion) of aid Greece needs to stay in the euro.

After a six-month offensive against German-inspired austerity succeeded only in deepening his country’s economic mess and antagonizing his European counterparts, there was no face-saving compromise on offer for Tsipras at a rancorous summit that ran for more than 17 hours.

“Trust has to be rebuilt, the Greek authorities have to take on responsibility for what they agreed to,” German chancellor Angela Merkel said after the meeting ended just before 9am in Brussels Monday. “It now hinges on step-by-step implementation of what we agreed.”

The agreement shifts the spotlight to the parliament in Athens, where lawmakers from Mr Tsipras’s Syriza party mutinied when he sought their endorsement two days ago for spending cuts, pensions savings and tax increases. They have until Wednesday to pass into law key creditor demands, including streamling value-added taxes, broadening the tax base to increase revenue and curbing pension costs.

While the summit agreement averted a worst-case outcome for Greece, it only established the basis for negotiations on an aid package, which would also include €25bn to recapitalise its weakened financial system.

The Stoxx Europe 600 Index climbed 1.5 per cent at 9.55am in London, while futures on the Standard & Poor’s 500 Index erased a drop to rise 0.3 per cent.

With Greece running out of money and its banks shut the past two weeks, the summit was billed as its last chance to stay in the euro. Greece has been in financial limbo since the government missed a payment to the International Monetary Fund and allowed its second rescue package to lapse on June 30.

“The Greek government has accepted practically everything,” Maltese prime minister Joseph Muscat said in an interview. “It accepted all the crucial and important points.”

The conditions that Mr Tsipras swallowed comprised a laundry list of unfinished business from Greece’s two previous bailouts and a new demand for the government to transfer €50bn of state assets to a holding company that will seek to either sell or generate cash from them. His creditors rejected Mr Tsipras’s pleas for a cut in the face value of Greek debt of about €310bn.

Ms Merkel said interest-payment grace periods and longer maturities will “be discussed once there is a successful evaluation of the new Greek programme”.