The drive to put Greece back on the road to recovery intensifies this week when auditors representing the indebted country’s creditors arrive in Athens for their latest review of the Greek economy.
Fourteen months after being bailed out to the tune of €86bn (£77bn) – Greece’s third financial rescue since 2010 – representatives of the EU and the International Monetary Fund fly in on Monday to review progress on economic reforms promised by the government in exchange for rescue funds.
The creditors’ visit is taking place against a backdrop of ongoing economic difficulty for the nation. Seven years into its worst slump in post-war history, the eurozone’s weakest link is saddled with anaemic growth, stubbornly high unemployment, poor export growth, consumer pessimism and debt of more than €330bn.
The Bruegel Institute, the Brussels-based economics thinktank, warned last week that Athens would need a fourth bailout when its current lifeline ends in 2018. “Greece will not be able to borrow from the markets,” said Zsolt Darvas, a senior economist at the institute. “Therefore there will be a fourth financial assistance programme.”
The IMF has said that recovery is impossible until Athens is granted some form of debt forgiveness. With Germany facing national elections next autumn, its hardline finance minister Wolfgang Schäuble remains adamantly opposed to waiving a proportion of Greece’s debt.
Friction is such that the German press has again raised the spectre of Greece leaving the eurozone – “Grexit” – saying the country’s ejection from the single currency might be the best option to combat falling living standards. Germany’s lower house approved Athens’ latest aid package on the premise that the IMF would be involved.
In May, eurozone finance ministers said the fulfilment of a first review – completed with the disbursement of €1.1bn in funds a week ago – would pave the way to discussion of debt relief. The leftist-led government in Athens has made a debt cut the cornerstone of its economic policy, with officials believing it is the only way to guarantee re-entry into bond markets. This would also allow the European Central Bank to buy Greek government debt under its quantitative easing programme.