The Greek debt crisis and impending “Grexit” have been absent from the headlines in recent months, following Syriza’s U-turn and decision to ask for a third bailout (worth €86 billion). The bailout was granted by Greece’s European partners with some degree of exasperation over Greek brinkmanship; its failure to honour previous bailouts completely; and frustration over the depth and pace of reforms which had already been agreed. It was made very clear to the Greek government that release of monies from the third bailout would only be made upon the passing of key pieces of legislation designed to lock reforms into law.
A vote to pass further spending cuts and tax increases in Athens and establish a privatisation fund (intended to facilitate the privatisation of certain state-held assets)was key to gaining an accord to release €10.3 billion from the third bailout package. Additionally, the Eurozone finance ministers has agreed to grant Greece debt relief in the shape of capping the interest rates on loans owed by Greece and extending the repayment period. Much of the funding will be used for debt repayment obligations, of course, fuelling left-wing arguments that the Greek bailouts are only of the banks in reality. This argument has always been short-sighted since the loans were taken in the name of the Greek people, for Greek projects, in the first place.
With Greek debt standing at more than 180% of the nation’s GDP (about €300 billion and three times the maximum permitted under Eurozone convergence rules), the IMF is keen to see debt relief of the capital owed to some extent. It has been unwilling to join the third bailout unless this condition was met. Such a move has been deferred until 2018, coincidentally after the German general election, of course (reiner zufall, as they say), but is probably enough to unlock an IMF contribution.
Eurogroup president, Jeroen Dijsselbloem, noted that the relief packages would be “phased in progressively” and noted: "We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme."