A golden goodbye for Greece?
It’s tourist season for Greece, and as a result everyone there seems to be happy. However, there is an undercurrent of uncertainty due to the Eurogroup decision on the bailout program due today. The press is focusing on what will happen when the program ends, with some voicing concern of another collapse unless debts are partly written off or restructured in some way.
We are likely to see some heated debate between eurozone finance ministers in Luxembourg today. There is some talk of extending loans by as much as fifteen years, but Germany is pulling a particularly hard stance and saying that it will only agree to extend for a further three years. However, our guess is that we will end up somewhere in the middle – perhaps seeing a five to seven year extension on the loans. This should give Greece the breathing space needed to make its debts sustainable and manage their obligations.
The bailout program decision has been taking some press attention away from another unfavourable topic, being the recent decision to rename Macedonia. Domestically this has been a huge issue and according to the polls, almost 70% of Greeks are opposed to the deal. The result has been mass demonstrations, and the opposition called for a vote of non-confidence (which prime minister Tsipras survived). Looking ahead to the 2019 elections, Tsipras may start using some of the fiscal surplus (currently around 3.5%) to cut taxes to regain favour in the run up to the polls.
Manos Papatheofanous – APQ IAC Member