Ever since the Greek debt crisis began seven years ago, Greece and its creditors have failed to conclude a single review of the country's debt relief programmes on time, says Bank of America Merrill Lynch (BAML). So it's no surprise that the current one, which is to decide whether Greece gets the next tranche of its third rescue package, is running late. The government had hoped to finish it by the end of last year, and start negotiations on debt relief to bring its public borrowing (180% of GDP) down to sustainable levels.
At present "all sides are being unreasonable", says John Foley on BreakingViews.com. Germany won't move without the International Monetary Fund, which is insisting that the government "make politically toxic pledges" to meet a tough fiscal surplus target of 3.5% of GDP. The left-wing populist government, meanwhile, "is refusing to cut generous pensions or lower the country's too-high income tax threshold". In the end, the odds are that the government will either capitulate or get booted out of office in a snap election, which Prime Minister Alexis Tsipras could call if he feels the creditors want too much. A vote would probably see his administration replaced by a centre-right party more amenable to the creditors' demands.
There will no doubt be some sort of fudge, as there always is; the crunch point would be July, when Greece must repay €6bn, and talk of "Grexit" may resurface. Talks about debt relief are likely to get delayed, according to BAML, and without them there is no prospect of the economy getting back on a sustainable long-term growth path. This long-running problem is only ever managed, never resolved.
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.
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