It has been a little over one year since top negotiators from IMF, EU and European Central Bank (ECB) last met in Athens, but the latest reports indicate there is hope for a third international bailout. This comes after the New Greek finance minister Euclid Tsakalotos formally wrote to Christine Lagarde, the IMF boss, requesting for the new loan.
With indications that teams from the financial players are already on the ground after their long hiatus, there is a reason for more hope in the debt-ridden country that is seeking more financial rescue to the tune of €86bn (£60bn). The idea, according to sources, is to halt the spiraling economy to avert a financial crisis.
However, it is not all good news because sources indicate the three-year bailout plan from IMF is facing logistical issues. This is despite the fact that Mr. Tsakalotos has delineated a series of financial reforms underpinned by two key legislations. Nevertheless, a government source claims that the delay is not being caused by either political or diplomatic reasons.
The Greek parliament has already passed the laws to initiate tough economic reforms that were part of the debt review terms demanded by creditors after the referendum. Key among these changes include tax rises and a total overhaul of the pensions system.
In the letter by the finance minister to Largade, there is a clear indication that the government is following up on its commitment to the creditors’ terms through its new policies. Tsakalotos also points out that these laws would gradually enhance fiscal sustainability and ensure long-term growth while still spreading the cost of such reforms fairly.
In a candidly written letter, the finance minister admits that it will take time before these changes are felt broadly. In the same breath, he notes that while it will take time, Greece will eventually return on a vigorous and sustainable path to economic growth.
The IMF has already confirmed receiving the letter and also confirmed that its teams would now reveal finer details of expected talks on the new bailout. This is the third time the country is being bailed out by the troika consisting of the IMF, European Union (EU) and European Central Bank since mid 2010.
With the hostility between creditors and the new-look government thawing, there is more hope now than ever that the bailout might indeed meet the August 20th deadline when the country needs to repay €3.2 billion to ECB. Indeed, the letter by the finance minister to IMF could be a symbolic gesture that they are ready to work closely because it is technically not necessary.
While things may be stabilizing, everything is not smooth sailing for the Syriza government. YanisVaroufakis, the former finance minister, was quoted in a leaked media report saying Syriza had a secret Plan B as far back as January in case the country was ejected from the Euro Zone.
The sensational transcript released by theGreek newspaper Kathimerini indicates there was a covert plan to have a parallel currency system and a team of technocrats was already hacking into tax systems to get information to implement such a system.
As of now, the issue at hand is clearing the fuzzy issue on when talks will concretely start and a location that is convenient for all parties involved. For now, things seem to be looking up for Tsipras despite the furor over Mr. Varoufakis’s controversial revelations.