February 9, 2017
Greece is once again caught between the interests of its lenders and its own citizens. As part of a 2015 rescue package, Greece must meet strict fiscal targets to unlock more financial aid and keep the International Monetary Fund, an important creditor, involved. The IMF says the country won’t meet those targets, touching off yet another global spectacle over the fate of Greece, the future of the euro area and the viability of the single currency.
1. What’s the hullabaloo about now?
Same as it ever was. Greece’s government, unable to borrow from bond markets at affordable rates, has relied for years on loans from Europe’s bailout fund and the IMF to pay its bills. Those loans come with strict conditions, and the government and its creditors are arguing over whether Greece is fulfilling them. Investors are once again on red alert.
2. But wait, didn’t Greece just get a huge bailout?
It got an 86 billion-euro ($92 billion) bailout in August 2015, the country’s third (well, technically it was the fifth, but let’s come back to that). That ended a period of great turmoil, leading the casual observer to think the Greek problem had been “solved.” But the money doesn’t get released at once. Away from the spotlight, the government and debt inspectors are in near-continuous talks about compliance with the conditions. Two are central to the current impasse: Greece must grow its budget surplus (before paying interest on its debt) to 3.5 percent of gross domestic product by 2018, and the IMF must be on board.