A reference on Wednesday to the “sustainability of Greece’s public debt” in the agenda for an extraordinary May 9 Eurogroup meeting essentially puts the issue of Greece’s debt on the “menu” as a condition for the now delayed first review of the Greek program (third bailout).
As such, yet another outstanding issue – with the Greek debt being of Olympus-sized proportions – merely increases the difficulty of coming to an agreement by Monday, given that Athens and its institutional creditors still disagree over a “contingency package” of measures demanded by the IMF in case Greece fails to meet memorandum goals through 2018.
The Eurogroup agenda was posted on Wednesday.
The issue of the Greek debt’s “sustainability” was abruptly thrust onto the “basket” of reforms and fiscal measures demanded of Athens to achieve the first review. Along with 5.4 billion euros in tax hikes (direct and indirect), in tandem with supplementary pension cuts, creditors have also pressed a new demand, namely, 3.6 billion euros worth of as yet unspecified spending cuts entailed in a “contingency package”.
While yet another deadline has been set to achieve the first review, analysts point to the end of June as critical for Greek state coffers, as no external financing from lenders would mean that – barring an unforeseen windfall or other funding source – that Athens would not be able to pay the sovereign bonds held by the ECB. A repayment date is set for mid July, totaling 2.3 billion euros.
