Greece isn’t leaving the European Union or the Euro, at least not yet. After a marathon round of meetings overnight, the Greek Prime Minister Alexis Tsipras and European Union leaders reached a deal for a new bailout and round of reforms for the struggling member nation.
In order for the bailout to be adopted, Greece’s parliament has to pass the terms of the deal by Wednesday, as well as pass some new reforms, including tax reform and European Union members will also have to sign off on the deal valued at 86 billion euros, or $96 million.
Here are the things the Greek government will have to do to receive the bailout package:
- Increase the Value Added Tax again, which will likely hit retailers and restaurateurs hardest.
- Reform and make cuts to the public pension programs.
- Greece must contribute 50 billion Euros in privatized assets to the fund, and at least half will go to decreasing debt and for economic stimulus programs.
- Adjust and modernize collective bargaining laws.
- Reduce overall cost of public sector.
The deal is very similar to the one that the Greek public rejected in a referendum the weekend of July 5, but because the country is in dire straights, it was forced to accept the proposal. Since 2010, the International Monetary Fund and Europe have leant Greece over 200 billion euros.
With an economy heavily tourism and consumerism focused, the retail sector has been hit hard by the instability. In April, retail sales fell 1.9 percent after making some promising gains last year.
The growing Value Added Tax (the close equivalent of a sales tax) is already as much as 23 percent and certain to be another major burden for the Greek consumer and tourist. Tourists can get some of those funds returned to them when they leave, but it’s still a hefty price to pay upfront.