institutions representing Greece’s official credi-
tors, as well as major financial houses, to the con-
clusion that, in Greece’s case, the scope of any
negotiation is determined by sovereign debt
maturities.
But these delays have one more consequence.
Given that the provisions of the adjustment pro-
grammes are expected to be implemented gradu-
ally over each three-year period, reviews should
be concluded on a quarterly basis to ensure that
each “tranche” of obligations is smaller and,
therefore, easier to handle: technically, adminis-
tratively, and politically.
But when successive reviews are many months
apart, the institutions’ “quartet” simply adds the
reforms that have to be done now to the reforms
that should already have been done, and as a
result the economy is unable to absorb, and the
public administration is unable to implement, the
changes.
T
he situation that emerged in the very first
months of 2017 made it absolutely clear
that this year will be critical for the medi-
um term prospects of the Greek economy. More
specifically, the good fiscal performance of 2016
has, to a certain extent, been offset by the cost of
uncertainty imposed on the economy by the gov-
ernment’s prolonged negotiation with the institu-
tions.
The actual damage done to the economy during
these months of negotiation cannot be precisely
calculated before the conclusion of the second
review of the third adjustment programme, but
one thing is certain: the strong momentum that
had been established at least until the end of
November 2016 is now gone for good.
Moreover, the difficult situation faced by the
Greek economy as a result of the delays in the
negotiations, especially in view of the third, as
well as forthcoming reviews, has led many of the
Trade with Greece
46
Despite uncertainty,
the economy is
bouncing back
The year 2017 is a key year for the Greek economy.
The evolution of the economy’s fundamentals, the
relationship between the government and the
institutions that represent Greece’s official creditors,
and the overall political climate will determine whether
Greece will gain, even on a trial basis, market access
prior to the expiration of the third memorandum, or if
it will remain locked out of international capital
markets, in which case it will be automatically forced
to sign a new loan agreement.
By Nikos Filippidis
