The complex Greek bailout deal that was finally reached in Brussels in the early hours of Tuesday morning will buy time to stabilise the eurozone and strengthen its financial firewalls — to protect against further contagion from the currency bloc’s weaker economies.
However there remain deep doubts about Greece’s ability to recover and avoid running out of money again in the longer term.
Athens cannot afford to borrow from private investors with interest rates near 26 percent on its 10-year bonds, so the EU/IMF bailout money – now totalling 240 billion euros – means it can pay off some of its loans.
But Professor Dimitris Katsikas of Athens University said it cannot hope for more: “I think this is Greece’s last chance because it is obvious from all these past few weeks and all the negotiations in Europe that the patience of European partners has been spent and I don’t think people are going to lend us any more money.”
After the agreement was reached finance minister Evangelos Venizelos said now Greece has to stop adding debt and get back to a normal economic cycle.
Keeping it on track will be the experts from the European Union, European Central Bank and International Monetary Fund – known as the troika.
And they are already stepping up the pressure, saying unless Athens follows through on economic reforms and savings to make its economy more competitive, it will need even more bailout money.
A confidential troika report seen by the Reuters news agency said: “Given the risks, the Greek programme may thus remain accident-prone, with questions about sustainability hanging over it.”
Beefed-up monitoring of the implementation of the reforms could bolster accusations among some Greeks of interference in domestic affairs but some critics say that is essential.
Dutch Finance Minister Jan Kees de Jager, one of Athens’ most strident critics, told Dutch news agency ANP he had bargained hard for the permanent monitoring mission. “This programme is not something to cheer about,” he said.