An upcoming Eurogroup meeting and continued talks between European creditors and the IMF will more-or-less determine the likelihood and scope of Greek debt relief by the end of the year, with Berlin again viewed as holding the key to whatever outcome.
By N. Bellos
An upcoming Eurogroup meeting and continued talks between European creditors and the IMF will more-or-less determine the likelihood and scope of Greek debt relief by the end of the year, with Berlin again viewed as holding the key to whatever outcome.
The goal of debt relief in 2016, even short-term measures, is now imperative for the bewildered leftist government in Athens, which has little to celebrate over the course of a year marked by continued recession, a “tax tsunami”, pension cuts and, most recently, a painful domestic policy defeat with its scrapped broadcast television license law.
The latter was struck down by a Greek high court last week, which ruled the controversial law unconstitutional.
While nerves are fraying in Athens, the atmosphere in Brussels appears upbeat among European diplomats, Commission officials and Euro zone representatives, a far cry from recent occasions when major decisions affecting Greece were on the horizon.
While a positive outcome isn’t guaranteed, nary a negative statement has been uttered by a European official on the prospect of some debt relief for the country, sans the very high-profile and rigid attitude expressed by powerful German Finance Minister Wolfgang Schauble.
Conversely, several high-ranking European officials, such as EU Commissioner Pierre Moscovici, have recently cited the need for some type of debt relief before the year is out.
The “blueprint” for short-term measures is considered a decision at a May 24, 2016 Euro group meeting, with the European Stability Mechanism (ESM) tasked with implementing measures that do not require any further approval by the Euro zone’s finance ministers.
Beyond the short term period, however, markets, possible investors and the IMF are looking past 2018, when the current (third) Greek bailout program ends.
Judging from the most recent statements by European leaders, excluding Germany, a possible plan for future debt relief via an extension of repayment terms and lower interest rates does not appear unrealistic.
Opposition remains over an immediate “haircut” of the debt.