In that Greece has been dealing with its debt crisis since the final days of 2009 and has needed three international bailouts, the on-going struggle between Greece and her creditors is hardly “news”. Its Syriza government, a coalition of the left, swept to power on a mandate to end austerity measures in the country, have the debt burden (largely) written off and, to a certain extent, have the Eurozone dance to its tune. In the event, despite a referendum and snap election, the government has had to accept that without the EU and IMF’s help, it would face sovereign bankruptcy. This has meant that Syriza has had to accept the reforms that its creditors have attached to their continuing support; reforms designed (in their opinions) to put Greece on a path to economic stability and recovery.
The third bailout, like its predecessors, has reform strings attached and money is only disbursed against progress on the agreed programme which, naturally, provokes resistance from both Greek society and government alike, but, ultimately, there is no alternative.
Assuming that the measurements gain parliamentary approval, Greece has agreed further austerity in the shape of a pension cut of 0.9% and a reduction in the tax threshold above which income is taxable. The measures should result in a reduction of governmental expenditure equivalent to 2% of GDP.
The latest release of funds requires the approval of Eurozone finance ministers at their 22nd May meeting, but that should be a formality. If funds are released, Greece will be able to honour repayments to the IMF and Eurozone of €6.9 billion which fall due in July.
The IMF is still unwilling to commit funds to the third bailout unless the Eurozone agrees to a haircut of Greek debt, which whilst economically sensible is politically unacceptable to most Eurozone creditor governments who would have great difficulty in selling the move to their citizens many of whom have faced domestic austerity measures since the Global Financial Crisis.