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After 4 days, Greece will hold one of the most crucial parliamentary elections in its recent history. Over the past weeks GRReporter has presented you with the analyses by journalist Kostas Stoupas, Potami leader Stavros Theodorakis, commentator Kostis Lympouridis, political scientist Plamen Tonchev. Today we offer you an external look at the Greek reality, that of Kaloyan Staykov, an economist at the Institute for Market Economics in Bulgaria, who talked with Polina Spartyanova.

How would you explain the present decline of the euro against the dollar? Is it associated with the tense election campaign in Greece?

It is associated with the problems in Greece to some extent, as the country is turning into a serious issue amid the euro zone and the political discourse that is dominating there is creating additional risks, which are not few anyway. Speaking of the euro-dollar ratio, we must be aware of the most important fact, namely the expected quantitative easing that the European Central Bank is about to make. This in practice means printing new money and putting it into the economies of the euro area primarily in exchange of government securities, both of stable and unstable economies, which is the cause for the price decline of the euro compared to other currencies. I think this is the main reason for the depreciation of the euro against the dollar.

Of course, there are other issues, such as the ongoing structural problems in the euro area that have not been resolved. The high indebtedness of European countries is often cited too but it is only due to these structural problems. Unfortunately, since 2009, we have seen no structural reforms, only easing on the part of the Central Bank, which is actually going on. The reason for the new quantitative easing by the European Central Bank is that economies simply refuse, politically, to undertake structural reforms, including in terms of their budgets. Frankfurt is currently the only lifesaving belt for these economies. Here is a circular argument - the bank prints money, because there are no structural reforms, and their absence is the fundamental problem. These two things together seriously affect the price of the euro, in US dollars and Swiss francs.

Amid all this turmoil, Greece is another straw that may break the camel's back and it is just adding another element of uncertainty in terms of whether it will remain in the euro zone or not, if it will renegotiate the bailout or not and under what conditions as well as in terms of the policy of the new government, because current estimates show that a far-left party will be dominant in the new government, which implies a serious policy change.

What do you think the scenario for the Greek economy will be if the radical left SYRIZA party wins at the end of the week?

I think there will be no major changes compared to what is happening now and to what will happen after the elections, because Greece currently has no other choice. It has no alternatives. On the one hand, it needs external financing in order to cover its debts, which simply cannot come from anywhere else but the Troika of creditors. It is the source of financing for Greece at present. The eventual future funding could be linked to the European Financial Stability Facility, the European Stability Mechanism, but again it depends on the successful completion of the current bailout programme. If Greece says, "Mind your own business, we will not meet your requirements", it cannot rely on future funding. This is so obvious that there is no other way. Therefore, when we talk about external financing, Greece can rely on those creditors alone. If it wants to rely on domestic borrowing, it may be secured from the banks. However, foreign creditors have imposed restrictions on the issuance of domestic debt and consequently Greece must comply with them. Within this mechanism, it cannot afford internal financing in industrial quantities. If it wants to break these rules again, the banks in the country have to find funds from somewhere; they are currently funded by the European Central Bank and the institution has firmly stated that if the current rescue mechanism is not extended and the country does not receive a positive assessment for satisfying the requirements to it, Frankfurt will stop lending to local banks. This means that the government can find money from nowhere, neither from external nor from internal sources.

There is a hypothetical alternative, namely for Greece to announce restructuring of 100% of its foreign debt and to balance the budget at the same time. To say, "From now on we do not need external financing, we will spend as much as we collect from taxes, we will stop paying the foreign debt," but this will lead to new problems with the stability of the banking system. Because if you rely on your own resources alone, when banks require additional liquidity assistance you must cut other costs such as wages, investments, maintenance, pensions. Therefore, it is a highly improbable scenario. Generally, the government may not rely on external funding from the Troika or the European Stability Mechanism alone, but domestic financing depends on the continuation of this support mechanism, on its extension or on the adoption of a new one in any form.