Hopes for a deal between Greece and its creditors rose this week after the International Monetary Fund (IMF) and European policymakers finally agreed on the exact terms they are going to offer the debt-laden nation. In the past few months, they have disagreed over several issues, notably the extent of reforms required to improve the Greek pensions regime and free up the labour market.
Greece's prime minister, Alexis Tsipras, was expected to give his verdict on the offer by tomorrow. However, he was also touting Greece's own plan this week, suggesting that discussions could drag on. On Wednesday, Greek stocks jumped by around 4% as traders looked forward to an end to the stand off.
What the commentators said
Tomorrow, Greece is due to pay the IMF €306m. It needn't actually pay the money today: it can roll the amount up with other payments, which total €1.6bn, and transfer all the money at the end of the month. But "Greece does not have the money", and it's hard to imagine where it might discover a "money tree".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
This stand off will, one way or another, be resolved in June, agreed The Economist. It's not clear whether Greece can actually pay, but either way, the remaining €7.2bn in the bailout fund that Greece hopes to unlock will disappear if there is no deal by the end of the month, because an extension to the programme negotiated in February expires then.
The agreement between the creditors reportedly calls for Greece to reach a primary budget surplus (in other words, to be taking more money in taxes than it spends, excluding interest payments) of 1% of GDP this year, and 3.5% by 2018, noted Kerin Hope in the FT. That's a lot more lenient than the targets in the current bailout plan, but still tougher than Athens had hoped for.
Greece may also baulk at pension reform. And even if there is a deal now, it won't change the bigger picture Greece needs a new overall rescue package if it is ever to get its debt under control, said The Economist. Hammering that particular deal out will constitute the next episode in this endless drama.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
Who is the richest person in the world?
The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
By Vaishali Varu Published
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
By Ruth Emery Published