Greece: 5 program reviews and non-stop ‘commitment checks’ until Aug 2018

The Eurgroup meeting last Thursday opened a long and winding road for the successful conclusion of the Greek program. “The exit from the memoranda in August 2018” as the Greek government calls it. The next 14 months will push Greece into a marathon race with several hurdles where the government will need to show endurance in pleasing the creditors.  Greece will have to pass five program reviews.

Greece will have to successfully pass four quarterly reviews as well as the final  super-review that before the successful conclusion of the 3. bailout program.

According to capital.gr, Theoretically, the next program reviews should take place in September and December 2017, March and June 2018. Although due to the German elections, the reviews in 2017 could merge into one.

This is also the reason why creditors gave Greece a bigger bailout tranche than originally planned. An additional 1.5 billion euro to the summer tranche of 7 billion.

In regular intervals the lenders will check whether the governments proceeds with the implementation of its commitments. Subject of controls will be not only the finance ministry but also the whole government.

The fifth and final review will evaluate whether Greece has met the targets of 3.5% of GDP in primary surplus or whether the additio0nal austerity measures of further pension cuts and broadening the tax-free basis, will have to be implemented earlier than in 2019 and 2020.

The program review in autumn will be crucial because it has to be clear whether the International Monetary Fund will participate with 2 billion euro.

This ongoing “supervision checks” will leave the team of the Greek finance ministry no space for a breath or a maneuver, especially when one of the major structural reforms ahead refers to the country’s public sector. “This issue affects the core of the electoral influence not only of the current government but of all Greek governments,” notes zougla.gr

It should be noted that since 2010 and the beginning of the austerity programs,  the biggest if not the total burden of the crisis has been carried out by the country’s private sector.

For the way to open for the participation in ECB’s Quantitative Easing and ultimate return to the international bond markets, Greece will have to have successful concluded the long and winding path, notes Capital.gr.