More sell-offs and belt-tightening to be forced on Greeks

Written By: Chris McLaughlin
Published: April 29, 2016 Last modified: October 25, 2016

Greece is heading for another knife-edged crunch with international creditors which could threaten its economic survival and raise fresh questions over the stability of the eurozone.

Athens is in a stand-off with the European Commission and the International Monetary Fund over the terms of a £68 million bailout – Greece’s third in six years.

Greece is heading for another knife-edged crunch with international creditors which could threaten its economic survival and raise fresh questions over the stability of the eurozone.

Athens is in a stand-off with the European Commission and the International Monetary Fund over the terms of a £68 million bailout – Greece’s third in six years.

If there is no agreement, the Greek government will be unable to drawn down funds to meet payment on previous debt relief due to be made in July and forfeit receipt of any new funds to keep the economy afloat.

The country’s finance ministers met counterparts from eurozone countries in Amsterdam but the talks on new terms – originally due to be completed at the end of last year – were inconclusive. The EC and IMF said that progress had been made, while attempting to paint the negotiations positively. But the IMF, which has expressed doubts over whether Greece can actually meet its fiscal requirements and which is not contributing to the third bailout, said there was still much more substantial progress to be made.

Athens is under an obligation to show convincing signs that it is on target to meet a 3.5 per cent surplus of public ­finances over debt by 2018 but the IMF is sceptical that this can be achieved without further financial reforms, including more privatisation.

The Amsterdam meeting attempted to force the Greek government representatives to agree to the  passing of new laws on fiscal reform and privatisation as an “insurance policy” to be enacted if budget targets are  not met. The EC described it as an “act of goodwill”. Under the contingency plan it may be possible to unlock some of the scheduled bailout to allow Greece to meet its payments to the EC and IMF in July. But the Greek finance minister Euclid Tsakalotos said it would not be possible because Greek law does not allow for such contingency legislation. He said his government would look instead for a “commitment mechanism”.

But the delay in settling longer-term arrangements comes at a critical time for Greece, which is at the heart of Europe’s refugee crisis and for the euro which is suffering with a weakening European Union economy. Its debt payment is due just a month after Britain votes in a referendum on remaining in the EU or leaving, which is adding further uncertainty to the eurozone project.

About Chris McLaughlin

Chris McLaughlin is Editor of Tribune