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EU demands "up-front action" from Greece to secure bailout

BRUSSELS - Greece is a step closer to securing a third bailout for the cash-strapped country.

EU economic affairs spokesperson Annika Breidthardt said Wednesday that "all last details have been clarified" and that senior EU finance officials would discuss the agreement by phone in the evening.

It could pave the way for a meeting of eurozone finance ministers to endorse the package, possibly on Friday.

EU officials say the deal aims to eliminate any uncertainty over reforms required from Greece and that "up-front action" is needed from Athens to gain access to the funds. They spoke only on condition of anonymity, in line with their department's rules.

The $93 billion bailout is based on forecasts that Greece's economy would return to growth of 2.7 percent in real terms in 2017.

Some analysts say such forecasts are too optimistic, noting that the closure of Greek banks in June and July as debt talks unfolded did severe damage to the country's economy.

"[R]ecent survey evidence suggests that the economic impact of capital controls has been catastrophic, with measures of activity collapsing to levels way below those seen even when the economy was contracting at annual rates of 9 percent in 2010/11," said Jonathan Loynes, chief European economist with Capital Economics, in a note.

The research firm expects Greece's growth to fall sharply over the rest of the year and for the slump to continue well into 2016.

"In short, we maintain the view that a third bailout for Greece will not solve its deep-seated economic and fiscal problems or secure its future inside the currency union," Loynes said.

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