Economic, political uncertainty again plague Greece as negotiations with lenders break off

A new deadline for achieving the first, and now elusive, review of the Greek program was bumped back after May 1 as talks in Athens this past week between the Tsipras government and institutional creditors broke-off without an agreement.

The latest delay was matched with more political drama in the Greek capital, with Prime Minister Alexis Tsipras expected to request an extraordinary Euro summit in order to press for a “political decision” at the highest level in order. A Euro summit, reminiscent of last summer’s explosive climate, would aim to bypass creditors’ representatives and especially the IMF’s insistence that Greece legislate a “contingency package” worth 3.6 billion euros to hedge against the possibility of failing to meet targets by 2018.

An April 22 deadline was missed this month and the subsequent May 1 deadline – Easter Sunday in the country – will also pass without an agreement.

As “N” reported over the past few days, Athens and lenders, the so-called “Quartet”, have unresolved differences over the latest demand by creditors, namely, the “contingency package” in case Greece does not meet primary budget surplus targets through 2018.

Creditors nixed the leftist government’s compromise proposal of an automatic fiscal adjustment mechanism that will be activated if targets fall short.

According to the government side, talks on the “regular” package of 5.4 billion euros worth of tax hikes and supplementary pension cuts (3 percent of GDP) through 2018 have been finalized.

In terms of the “real economy”, delay of the review means that loan installments of the 85.5-billion-euro third bailout cannot commence. The development translates into shrinking state coffers and delayed payments to suppliers, at first glance, as well as heightened economic and political uncertainty again battering the recession-plagued country.