The EU/IMF/ECB troika is due to return to Athens to resume a review of Greece’s bailout after some sparring over budget measures.
Greece’s president and prime minister have said they will not impose any further austerity measures and hope that their ability to run a primary surplus will persuade its lenders to cut it some more slack on its bailout loans to make its debt sustainable. The EU and IMF say there will be a fiscal gap next year that must be filled by domestic measures, be they further wage and pension cuts or tax increases.
We had a round of brinkmanship last week with EU officials saying they weren’t going to turn up because Athens had not come up with plausible ways to fill a 2 billion euros hole in its 2014 budget. But on Saturday, the European Commission said the review was back on after the Greek government came up with fresh proposals.
The bottom line is that after Angela Merkel decided once and for all last year that Greece should not be allowed to fall out of the euro zone, this will be sorted one way or another.
However, reform is never easy in Greece – viz Sunday’s protest against a relaxation of Sunday shopping rules – and the coalition government has a wafer thin majority. To focus minds, Greek workers will hold a 24-hour strike this week to protest against austerity measures and public sector layoffs demanded by the country’s international lenders.