Greece is under pressure to reassure Europe and the International Monetary Fund that it can deliver on the terms of its international bailout in order to receive the next installment of rescue money.
Officials from the troika – the EU, IMF and European Central Bank – have been meeting with ministers about shortfalls in budget cuts, unpopular property and restaurant sales taxes and problems with privatisations.
Those issues must be sorted out for Athens to get the next 8.1 billion euros in aid.
Christian Schulz, Senior Economist with Berenberg Bank is hopeful. He said: “The Greek coalition seems stable enough – even after it has become a little smaller because of the defection of one party – to see through even tougher votes in parliament and continue with the reforms. But also on the side of the troika there’s more willingness to be flexible on Greece since it demonstrated last year that it wants to stay in the euro.”
And some in the financial markets are prepared to look on the bright side of life. Henk Potts, Equity Strategist with Barclays was recently upbeat about the Greek govermment’s efforts: “They’ve made incredible progress in terms of dealing with the budget deficit; alongside that its economy is becoming more competitive, labour market costs have come down, we also know that tourism revenue continues to rise, in fact it could be at a record level during the course of this year. Financial markets are open to Greece once again.”
But tourism revenues expected to bounce back to pre-crisis levels will not pay the wages of Greece’s still bloated government workforce.
Athens has missed a June deadline to move 12.500 civil servants into a “mobility scheme”, under which they are transferred or dismissed within a year..
That and the other sticking points are supposed to be addressed in what a senior Greek official admitted will be “very difficult negotiations” before eurozone finance ministers meet on July 8 to again discuss the situation in Greece.