Progress made on Greek bailout funds
Greece has been under review by the European Commission, the European Central Bank and the International Monetary Fund since September but talks with Athens over labour regulations, spending cuts and structural reform collapsed. This has prevented the country accessing billions of euros in rescue funds.
After a two month stalemate negotiations have reopened and the Greek Finance Minister Ioannis Stournaras said that
“We’ve made substantial progress in closing up a number of these outstanding issues”.
A sum of approximately €10.1 billion has been budgeted for Greece but the country has not received the funds as a result of the halt in negotiations. Eurozone finance ministers have set a financial deal with the Greek Government in motion, driven in part by the fact that Greece’s central bank demonstrated its first current account surplus last year since records began.
However, negotiations over the €11 billion worth of funding that the country requires for the rest of 2014 and 2015 remain stuck. The IMF is unable to disburse aid unless the country has guaranteed financing for the next 12 months and so cannot release the €3.6 billion that has been allocated to Greece in two instalments.
Additionally, the troika wants Greece to implement further austerity measures and raise taxes. Over the past 4 years budget cut measures such as these have meant a 25% decrease of incomes in the country, causing the desperate unemployment situation. The Greek government is strongly opposed to further budget cuts which will impact harder on the already struggling Greek residents.
Greece’s huge national debt is estimated to be 175% of the country’s economic output and is fuelling the country’s financial and economic problems. A new debt restructuring plan or another aid instalment may be required to keep the country operational.