Eurozone Ministers have arrived at a “pact” in respect of Greece. The pact allows the release of those much-needed loans that have taken up so much of the Eurozone’s time and energy. You may think that this is all very good news for the Greek people.
However, the central core of the agreement is that Greek Public Debt should fall to 124% of Gross Domestic Product by 2020 and is to be achieved via a raft of more debt-cutting steps and continuing austerity.
This “tentative” agreement should see the release of up to €44 billion in bailout funds to Athens, otherwise….. formal insolvency beckons.
Once again, we are going to be witnessing a process of German dissidence, the continued rise of the IMF, performance-related stage payments, delays etc….as the Greek funding is parsimoniously unlocked in three increasingly painful stages.
The formal decision and an agreement on how these disbursements are to be managed will me made by 13th December. One thing that we can be sure of is that each payment will involve a similar process of troika visits, meetings and procrastination.
Apart from cuts to the interest rate which Greece is having to pay on all of its loans, there will be an 15 year extension of the bilateral and EFSF loans plus a deferral of 10 years on interest payments on EFSF loans.
So what difference will all of the above make to the average Greek in the street?….NONE.
Yesterday, Bank of Greece Governor George Provopolous said that the Greek economy is expected to grow in 2014. He feels that by then, Greece’s fiscal problems will have been eliminated.
He did not specify how the country’s political, social and institutional issues will have been dealt-with.
The main effect is that the Markets will now enjoy a few more days in the Greek sunshine…….as they await the next cloud………