Yet another stalemate on aid for Greece may resolve itself shortly. The Greek Parliament has approved all the measures requested by the creditors, including the heavy safeguard clause not foreseen in the agreements signed last summer and imposed in recent weeks by the IMF and Germany. In essence, this is an austerity surplus that will be triggered automatically in the event of failure to achieve the 2018 budget targets (a highly probable eventuality).
At this point, the Eurogroup today should unlock a new one tranche of aid to Greece from 11 billion euros. The sum is higher than expected and should secure the Greek public accounts until November, allowing the country to pay arrears as well.
But the big one remains unresolved public debt issue. International Monetary Fund has again called for an "early and unconditional" restructuring, arguing that otherwise the debt will rise to 250% in 2060. The IMF, therefore, immediately proposes the adoption of a "fixed interest rate at low levels for an extended period , which does not exceed 1,5% until 2040”. On this front, the main obstacle to the agreement is the opposition of the Germany.
"I hope that an agreement will be reached and that investor confidence in Greece will return afterwards," said the president of the Eurogroup, Jeroen Dijsselbloem, assuring that today we will talk "seriously" about a reduction of the Greek debt for the first time.
The debt issue was put on paper in the extraordinary meeting of May 9, in which a "sequential" approach was outlined through measures such as lengthening maturities and extending grace periods.
In the end, Greece is likely today to get the green light for new aid and just a promise on public debt restructuring.
