European markets are trading higher on a positive note this morning on the back of a deal which was finally announced this morning between Greece and its creditors. The negotiations between the two parties have continued over the weekend and they have made tremendous efforts to stay on the same page. There have been many moments over the weekend, when it appeared that once again the communications between two parties could break, however, both sides have shown their sensible behavior and have worked through their conflicts.
If you are asking if this deal has better terms for Mr Tsipras, then the answer is no. The potential deal actually has a lot more tougher terms and conditions attached to it if we compare it when the Greek officials walked away from their negotiations and called the referendum. That deal was far much better than the one which they are forced to accept now.
The main agenda is certainly around the trust arena and the creditors are not positive that Greece will be 100 percent committed towards its reforms which it is ready to adopt. Can you blame the creditors for this? Perhaps no, and the reason is that it is difficult to have a faith in someone, whose all efforts were lobbying against austerity. Therefore, this time Eurozone leaders want something more concrete that Greece will stick to its plans after taking the money.
Guarantees have been requested from Greece that it will stick to its reforms and austerity package. Privatization of funds is suggested which will hold nearly 50 billion euro worth of assets and third party has authority to sell them. Creditors have also demanded that the new pension and VAT proposals which the government has proposed in their new proposal should be passed in their parliament by Wednesday.
The creditors are also focused on factors which go beyond this reform and have asked Greece to look at the bigger situation. They have asked Greece to keep a firm grip on growth and if the situation becomes worse and growth stalls further, then the government should be in a position to implement more reforms and take all the necessary steps to boost the growth. This sounds way too rosy for creditors, but they are certainly lobbying for this.
Moving away from this, the Chinese export number this morning have printed a more upbeat number, but the import data were still not that much encouraging. This is mainly due to the reason that the world’s second biggest economy is still battling with over capacity. The export number increased by 2.3 percent during the month of June as compared to the number a year ago while the import number slipped by 6.1 percent on year. The trade surplus for the country now stands at 46.54 billion dollars.