ASSESSMENTS

For Greece and Its Creditors, the Clock Is Ticking

Feb 1, 2017 | 09:16 GMT

For Greece and Its Creditors, the Clock Is Ticking
Greek farmers protesting tax increases use their tractors to block a border crossing into Macedonia. Growing public discontent with austerity measures linked to Greece's bailout program could threaten the fragile coalition government.

(SAKIS MITROLIDIS/AFP/Getty Images)

Forecast Highlights

  • Both Athens and its creditors want to complete the review of Greece’s bailout program before the European electoral season starts in March, making an agreement likely.
  • The creditors will oppose granting Greece substantial debt relief, at least until after German elections in September.
  • Greece's fragile political system and persistent social unrest will continue to threaten the country’s membership in the eurozone.

For both Greece and its creditors, time is slipping away. Both sides have strong incentive to wrap up a review of the country's third bailout program by March. But despite the sense of urgency, a recent meeting between their representatives ended without a deal. The government in Athens has balked at conditions set by creditors -- including pressure to introduce reforms in labor markets and the energy sector and to commit to spending cuts and fiscal reforms that would extend beyond the bailout program's end in 2018 -- in order to receive another round of funds. However, because of strong pressure on both sides to reach a deal, an agreement is likely, although more weeks of negotiations likely lie ahead....

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