With the prospect of a final deal on the completion of the second review of the Greek adjustment program and a debt relief appearing remote, the Greek government hopes to achieve a political solution to the conundrum in the current talks with its creditors. The divergence of views between Athens and its lenders on a number of core matters, which include labour reforms, fiscal targets and the restructuring of the Greek debt remain. The key to overcoming the impasse, at least in the first stage, seems to be dependent on whether the IMF will finally agree to participate in the Greek program or remain onboard in an advisory capacity, if the other creditors reject its position for a debt relief, which is the most likely scenario given Germany’s unwavering stance on the issue. If the IMF manages to impose its positions for a long-term sustainable solution on the Greek debt, the Greek government will be forced to adopt a new package of austerity measures for 2018 and beyond, while abandoning its red lines on labour reforms. In the event the IMF stays on the Greek program as an advisor, the way will be paved for a less harsh set of measures which will come, however, with a semi-solution for the debt, similar to what is already in place with the medium-term debt relief measures agreed between the sides. The Greek PM Alexis Tsipras is trying to gain as much as possible by ensuring maximum results on the debt front, while avoiding taking harsh measures at the same time. Tsipras will meet with Finance Commissioner Pierre Moscovici and ECB Director Benoit Coeure in Athens, Monday, in an effort to push for a political solution, days before the crucial December 5 EuroGroup meeting.
Greek PM Tsipras meets with EC Commissioner in Athens