Galery

1

Greece's external debt remains unstable in the current situation. The country needs another two years in order to implement the recovery programme under the contract for financial assistance. Meanwhile, the public debt will be burdened additionally. What should be done so that it can fall to 120% of GDP in 2020?

Currently, the negotiations both of the coalition government and the creditors, are centred around Greece to being granted an extension of the assistance programme in its present form for another two years. A central problem arises here, which goes beyond the country - the International Monetary Fund has its own inhibitions against this programme being extended. Many voters from northern Europe also do not support the idea of the financial assistance to Greece being extended. There is a clash of interests of the foreign creditors, which exceeds the powers and abilities of the Greek Prime Minister.

The International Monetary Fund insists on a new cut of the debt held by the central banks of Europe. The European Central Bank categorically refuses to accept such a scenario. Greece, its new programme and its need of healing, are somewhere in the middle.

In my opinion, the situation today stems from the creditors' desire for Greece to proceed to a symbolic change. It can be related either to lay-offs of civil servants or salary cuts, or to acceleration of the privatization processes. European leaders want to show their taxpayers that if an extension of the aid is necessary, their money will not go into the old Greece as they know it, but into a country which is trying to change and is making efforts in this direction.

The real problem comes from the fact that the symbolic change wanted by the creditors, appears to be the change which is most strongly opposed by the Greek political leaders. Therefore, the Greek side of the negotiations is not strong.