Having concluded the first round of direct talks with international creditors, Greek government sources believe that despite various unresolved issues, the third review of the bailout program will be concluded swiftly.
Additionally, the same sources suggest that – provided that there are no bad news on the fiscal front in coming months – the International Monetary Fund will remain in the Greek program. This development is seen as positive by Athens, as thing stand, in terms of the ongoing effort for debt relief.
Greece’s lenders have promised to determine if Athens needs further debt relief in the summer of next year.
A successful review is considered by analysts to be key in the upcoming bond issuances being planned by the Greek Finance Ministry as part of its debt re-profiling effort that will serve the aim of exiting the bailout program successfully in August 2018.
As government sources stress, Greek premier, Alexis Tsipras, will seek to restore normality in the economy in coming months, ahead of a desired “clean exit” from the bailout era.
The Stratfor think tank said in a note last week that the European Union probably won’t accept a debt writedown, but Athens would like to at least be given a grace period for repayment, longer maturities, and lower interest rates. Based on its analyses, Stratfor expressed doubt as to whether Greece will be able to achieve a “clean exit” from its bailout program in 2018.
According to local media reports citing Eurozone sources, as Athens looks set to exit the bailout program in august 2018, the prevalent scenario for the post-bailout era currently under discussion entails Greece being offered a “hybrid” program by which debt relief measures are gradually implemented in exchange for the implementation of specific, agreed reforms. This will be accompanied by a framework for fiscal supervision by European institutions. It will also allow the country to tap finance markets for its financing needs.
Alternatively, Greece could have a “clean exit” from the program, with no new program and no provision for financial assistance – which is what the government desires. This scenario, however, is considered unlikely. Another available option being considered is the adoption of a precautionary credit line that Greece could use if it cannot tap bond markets at a satisfactory rate. The credit line will most likely be tied to a “mini program” of reforms./IBNA