October 11, 2016
Good news coming out of the dismal mess of the Greek economy and its international bailout has been a rare commodity over the past six years. So it is tempting to celebrate the decision of the eurogroup of finance ministers that Athens has done enough structural reform to receive the latest €2.8bn tranche of its bailout.
In practice, a quiet measure of relief would be more appropriate than unbridled joy. While Greece’s government has done better than many sceptics feared following the shambles of last year’s referendum and re-election of Alexis Tsipras as prime minister, the measures it has enacted are highly unlikely to make a material difference to growth in the short to medium run.
The repeated warnings from the International Monetary Fund that Greece needs more fiscal space — and, if necessary, debt relief — are more apposite in addressing the country’s immediate priorities. If the eurozone authorities want to translate Athens’ fragile recent achievements into growth, they will need to look at the demand side of the economy as well as its productive efficiency.
Despite some grumbling from the usual quarters (Berlin), the eurogroup ministers have decided that Greece has done enough to reform its expensive pension system, liberalise the energy sector and set up a new privatisation agency to warrant the release of the final part of a tranche of money originally due earlier this year.