Tossing the dice, once more
Debt relief of sorts was decided for Greece at last week's Eurogroup. Short-term reprofiling of existing Greek debt, or rather of significant sections of such debt, with term extensions and interest-rate reductions, will provide for effective relief of more than 20% of its net present value; in fact, parts of these operations extend beyond the short-term horizon that was agreed - but the Greek side did not seem ready to recognise this.
The counterpart to this positive move of Greece's creditors was the continuing difficulty in closing the current Adjustment Programme review. The Troika/Quartet is expected to be back in Athens to keep slogging in that direction. But while until last week the main obstacle was supposed to be a spate of labour-market and union-law reforms, now tensions arise over the exorbitant primary surplus expected of the Greek economy for 2018 and (more or less) ever after, were the IMF to join the Greek Programme since the Europeans (=Germany) do not accept to even discuss further debt reduction pointing towards some sort of sustainability.
Such was the field of argument, when the Greek Government announced a unilateral decision to grant to the less-fortunate of pensioners a one-off supplement (and to keep on board the low VAT rate for those Eastern Aegean islands that bear the brunt of the refugee wave). Such moves are supposed to be financed but the extra surplus raised through aggressive tax measures implemented in 2018, over and above the 0.5% of GDP agreed with the Troika as a primary surplus for the year. This unilateral move - widely - widely interpreted as a pointer towards earlier-than-expected elections in Greece - created once more the impression of a cornered Greek Government tossing the dice.