The Greek government has sent Eurogroup members a letter setting out the structural reforms it intends to undertake. The countries and institutions involved in the rescue of Greece (previously called "troikas") have studied the document and statement that they consider "this list of measures broad enough to be a valid starting point for reaching a positive conclusion of the control procedure ”.
The stalemate between Greece and its partners is therefore slowly easing. The hard line adopted by most of the creditors, some more explicitly (Germany, Spain and Portugal) some more covertly (France for example), seems to have borne fruit.
From here on, negotiations will begin until the completion of the control procedure for Greece (by the end of April); the euro area countries involved in the bailout will analyze the agreement individually – some in their parliaments, some not -, further compromises will have to be found, and, ultimately, the aid program will be extended until the end of June.
This will not be the end of the Greek saga, as debt financing will remain somewhat complicated until the last tranche of the bailout package is repaid, and interest payments on bonds held by the ECB will be rerouted to the Greek Treasury. Even after this step, Greece will struggle to generate enough tax revenues to meet its commitments, given the damage done to the local economy by the political turmoil that has been going on since December.
While the likelihood of a “Grexit” has significantly decreased in recent days, one cannot completely rule out the possibility for next year, however remote. The two key parameters to monitor in the coming months will be the recovery of the Greek economy and the local political climate.
