Bloomberg: Greece’s Road to Bailout Exit

Monday, July 31st, 2017
Last Update: 11:33
A return to the bond market last week, the pledge of 8.5 billion euros ($9.5 billion) in new loans from euro-area creditors, the possibility of more money from the International Monetary Fund and a S&P Global Ratings outlook upgrade have coalesced to bolster investor sentiment that Greece has turned a corner, according to Bloomberg.Trouble is, much depends on the country implementing reforms -- dozens of the 140 measures agreed to are in various stages of application and more than 100 additional actions are needed to access the remaining 26.9 billion euros in funds before the current bailout program ends in August 2018.

While the evidence of belt-tightening is everywhere in Greece, from falling incomes to rising poverty, the country has less to show in terms of structural overhauls. Creditor demands for more measures threaten to become politically explosive as Greek citizens and businesses count the cost of the financial crisis that has thrown their lives into turmoil over the last seven years.

‘Enormous Impact’

The real problem is with reforms like fixing the tax system and the judiciary that require “long implementation,”  Gerassimos Moschonas, an associate professor of comparative politics at Panteion University in Athens said to Bloomberg. Belt-tightening measures have had a dramatic effect on life, making further long-lasting reforms difficult, he said.

“The income of an average household has decreased at least 40 percent during the crisis, poverty risk has increased 35.6 percent, pension cuts are enormous and there is over-taxation,” he said.

What Privatization?

Prime Minister Alexis Tsipras’s government is struggling to squeeze pensions even more, allow Sunday openings for stores -- which could threaten the livelihoods of small mom-and-pop shops that dot the country -- consider further taxes and change labor laws that would make it even harder for employees to go on a strike.

“There’s no serious implementation,” of difficult structural reforms, said Moschonas. “The Greek state has failed” to put them in place even after they were voted in parliament because of a lack of political will and the absence of technical expertise, he said.

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