Greece promised its lenders on March 19 that it would present a comprehensive list of economic reforms in the coming weeks. The Greek government is dealing with liquidity problems and needs the Eurogroup to disburse the final tranche of its bailout program — roughly 7 billion euros ($7.6 billion) — as fast as possible. Athens is also dealing with the threat of a run on Greek banks, which increased after the head of the Eurogroup suggested that Athens may need to introduce capital controls. On top of its financial problems, the Greek government is also dealing with dissent in the ruling Syriza party.
Greece is currently dealing with three key problems:
Liquidity. Tax collection is declining, and the European Union and the International Monetary Fund recently warned that Athens failed to meet its primary surplus target for 2014. In recent weeks, EU officials have suggested that Greece may need a third bailout by midyear; several figures have been mentioned recently, but the bailout would probably be around 30 billion to 50 billion euros.
Substantial debt repayments for the rest of the year. Greece has debt repayments to the IMF between March and July, and to the European Central Bank between July and December. So far, Athens has been repaying its debt to the IMF, but only after tapping the reserves from social security funds, ministries and state-owned companies.
Bank deposit outflows. Some 20 billion euros have left the Greek banking system since December. The outflows temporarily slowed down after Athens reached an agreement with its lenders on Feb. 20 to extend its bailout program for four months. But on March 18, Greek banks saw deposit outflows of between 300 million and 400 million euros — the highest in a single day since the February agreement — after the head of the Eurogroup, Jeroen Dijsselbloem, suggested that Greece could be forced to implement capital controls.
Greece is expected to present a more comprehensive list of economic reforms in the coming weeks. After Athens makes its proposals, a special Eurogroup summit will probably be called to debate the situation. Athens' promise to present a list of economic reforms to its lenders is intended to assuage doubt and secure the disbursement of the final tranche of its bailout program. The Eurogroup will, however, continue its strategy of pressuring Greece to obtain concessions. Greece's lenders will probably decide to break the final tranche of the bailout into smaller installments, continuing to pressure Athens to introduce reforms.
