The question is hard to answer. On the one hand, primary surplus has negative effect on demand relative to a primary deficit. Hence one may argue that the proposed agreement has a negative effect on Greek GDP. On the other hand the existing bailout agreement required a higher primary surplus than proposed agreement, and the Greek economy was growing last year under the old agreement. Hence one may argue that the proposed agreement requires smaller cuts in government expenditures than the old one. Therefore it will have a positive effect on Greek GDP relative to the exiting agreement.

To set actual negative policy interest rate, is not that difficult as several of Europe’s central banks have cut key interest rates below zero. The more difficult question is how to do it so that it affects the market rates. Lending rates in the UK for example are significantly affected by regulations. It is unclear to what extent negative policy rate could offset that effect. In addition, some of the proposals that would ensure negative interest rates on deposits, for examples, ignores some of the practicalities of implementation. To introduce negative interest rate on some deposits, would require to inform depositors in advance that the term of their deposit contract changes. This can generate large deposit withdrawals as people would rather hold cash potentially resulting in liquidity problems of banks. This can reduce bank lending even further. In general, central banks can set they key interest rates below zero n an unanticipated way. However, ensuring that negative interest rates are paid on various financial assets, are very hard to achieve in an unanticipated fashion, which can destabilise financial markets.