No Other Way
In order for Greece to regain market financing access and be rid of international supervision, she must implement the set bailout program… and fast! These were the sentiments of Greece’s re-elected Prime Minister Alexis Tsipras on Saturday.
The statement was made after the new parliament was sworn in. Addressing lawmakers from his party Syriza, the Premier made it clear that he intends to complete the initial review of the August bailout valued at 86 billion euro, after which he would initiate debt relief negotiations with Greece’s eurozone partners.
No Mean Feat
There are no delusions that this is going to be easy. However, the Premier is aware of the necessity of the process to relieve Greece of its current perpetual surveillance and enable the start of meaningful discussions.
There will be massive reforms required as part of the bailout program implementation. These will include reforms on the healthcare sector, financial sector, public services, taxation and pensions. All these will have to be done by 15th November in order to unlock the next installment of aid and get much needed capital to inject into affected banks.
Not The Original Plan
The Premier’s statement may come as a surprise to some who witnessed his original position on the bailout program. He called for a referendum that would reject nearly punitive terms necessary for such a program. In July, however, he accepted the stringent conditions he was so firmly against such as shutting banks, rationing cash and imposing control of capital.
This change of position cost him some political cronies as a faction broke from his party Syriza. However, it did not cost him the election as he was comfortably re-elected with the help of coalition partners from the Nationalist Party. He hopes the party can have a change of heart as well; learning from the mistakes in its initially tumultuous time in power and keeping past divisions in the past in honor of the collective will.
However, the party would still aim to make changes in the country by reforming the justice, education and social welfare systems, while fighting corruption and tax evasion.
Not All At Once
Despite their determination to stick with the bailout and their hope for relief from eurozone partners, officials caution Greece against expecting too much too soon when debt relief talks begin. The country is viewed as not needing the large-scale debt relief it is hoping to get having already received a history making concessionary loan from eurozone partners.
Sources say that a 15% cap is being discussed which will be enacted through extended loan maturities and provision of grace periods for repayments as - and when - needed. These are easier terms than those offered to developing countries (10%). The IMF has made clear that in order to maintain involvement in Greece, the country must show full compliance to the bailout program and show adequate debt relief conditions for the eurozone. The same conditions are necessary for Germany, eurozone’s leading economy, to convince its parliament of their involvement in Greece as well.