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Creditors have cleared a fresh instalment of bailout billions to keep Greece afloat over the summer — but Greek civil servants will pay the price.
BRUSSELS, Belgium — Greece has secured a $8.7 billion tranche of bailout money from its international creditors to keep its economy afloat over the summer and haul the euro zone back from the brink of renewed crisis.
Under the deal struck by euro-zone finance ministers late Monday, the money will be drip-fed in installments up to October in return for the government meeting pledges to overhaul the tax system and introduce further civil service reforms.
Those proposals — due for debate in the Greek parliament this week — are expected to lead to 15,000 public sector layoffs, as well as pay cuts and reduced job security for another 12,500 civil servants.
Public employees were holding a second day of demonstrations and strikes against the measures on Tuesday.
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The European Union's top finance official said the unpopular reforms were essential to making the Greek economy more competitive.
"In many areas we need to see more determined implementation of measures needed to boost competitiveness and investment, and to accelerate recovery and job creation," EU Economic and Monetary Affairs Commissioner Olli Rehn said in a statement. "This is not only about cost savings: it is about creating a more efficient civil service that is geared to serving the needs of citizens and businesses."
The deal should help calm market fears about the euro zone, which rose to panic levels again last week as negotiations on the Greek bailout stumbled and Portugal's government came close to collapse in a dispute over austerity measures of its own.
Over the weekend, Portuguese Prime Minister Pedro Passos Coelho managed to patch together his coalition government. However, the political crisis there and the doubts in Greece have underscored the continued fragility of the euro zone's southern members who remain locked in deep recession.
Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of euro-zone ministers, on Monday warned political stability was "crucial" in Portugal in order to push through its bailout program.