The first audit of Greece’s structural changes had barely concluded when it was announced that international creditors would arrive in Athens on Monday to take an even closer look at the country’s progress on imposing their austerity and privatization agenda . Offering 86 billion euros ($95 billion), Greece’s third credit package since 2010 requires budget cuts. Within the framework of initial evaluations, creditors will have already lent 11 billion euros in multiple tranches between February and November of this year.
The upcoming second audit will be decisive: In return for credit, Greece will be required to, among other things, change labor laws, introduce tough rules for dealing with bad loans and present a budget for the next three years. Creditors insist on guiding a total of 33 austerity measures.
So far, Greece has been slow to implement the cuts. But now things cannot move quickly enough for the governing Syriza party, which was elected on an anti-austerity platform in 2015. Officials have expressed their intent to finalize all cuts by the time EU finance ministers hold their last meeting of this year, on December 5. The newspaper Kathimerini has reported on a “fast-track review procedure.”
Panagiotis Petrakis, an economics professor at the University of Athens, told DW, that he foresees difficulties and delays, even if the government does everything according to plan. “For the creditors’ long-term finance plan (until 2020) to work, one would have to reach an agreement on possible debt relief for Greece now – or at least agreements on concrete goals for necessary budget surpluses,” he said. “Only then would one know just how much more money the state would be taking in than it will be spending, and thus whether it could service its debt.” That is exactly the agreement that the many EU states involved in Greece’s credit plan are avoiding or seeking to postpone until a later date.
IMF’s ‘key role’
A lot is riding in Athens on the closely watched fight over the role that the International Monetary Fund will play down the line. The IMF has declared that Greece’s debt is unsustainable. It has made its own participation in the credit program contingent upon debt relief. Individual EU member states, Germany chief among them, object to such calls. And so the IMF’s future role remains unclear, though special status as a nonlending participant in Greece’s credit plan is a conceivable option.
Prime Minister Alexis Tsipras has declared that he will deal with the issue personally: At a party conference in Athens on Thursday, he said “measures for debt relief” would have to be agreed upon parallel to the second audit of Greece’s economy. He added that Greece must be allowed to take part in the European Central Bank’s multibillion-euro bond purchasing program.
In any case, it is important for Greece that the IMF remain on board, the economic analyst Nikos Filippidis said on Skai TV. “The IMF plays a key role in Greece’s intended return to financial markets,” Filippidis told the broadcaster. “No country can finance its participation in the free market without the IMF’s seal of creditworthiness.” The government has set its sights on returning to markets in 2017. Tsipras has promised that by then Greece will have growth rates exceeding 2.5 percent.
Professor Petrakis is uncertain about that prognosis. “At the University of Athens, we use analytical instruments similar to those of the EU Commission, and we cannot confirm such optimistic prognoses at the moment,” he said. “We do think, however, that the Greek economy will grow by about 1 percent in 2017.”
But the IMF’s participation would also have a downside for Greece. No agency has demanded more business-first alterations to Greece’s labor policy. The IMF has been especially insistent that Greece loosen its regulations on protection against dismissal in order to increase turnover. Such neoliberal recipes are a red line for inveterate leftist voters. Meanwhile, Labor Minister Giorgos Katrougalos is playing for time: He intends to wait for the European Court of Justice to decide on protection against dismissal before consenting to such changes. Petrakis sees that as evidence that the government’s implementation of austerity measures will not be speedy. It is unclear whether the court will hand down a decision on the issue before year’s end.