Economy

Greek Debt Relief Discussions to follow says PM Tsipras

Greek Debt Relief Discussions to follow says PM Tsipras

The Prime Minister of Greece, Alexis Tsipras, announced Wednesday that debt relief discussions would follow the third bailout review talks that are ongoing and expected to conclude by January 2018. He made this statement in a meeting of the lawmakers from his Syriza party yesterday.

The left leaning Syriza came to power with the promise of debt relief for the highly indebted country, where the current debt stands at 177 percent of the GDP or the Gross Domestic Product. Indeed, while Tsipras made it a campaign pledge, subsequent rounds of austerity measures have made the Greeks weary about such announcements.

Optimism about the Future of the Debt Crisis

Having said that, the fact that the broader Eurozone led by France and Germany is tending towards moves to reform the European Union, there is some basis on which the Greeks can expect debt relief. However, Tsipras himself has qualified his announcement by saying that the prerequisite for debt relief is the successful conclusion of the review of the third bailout talks that are expected to end in January 2018. Indeed, Greece and its creditors have a long and torturous history of promising one thing and reneging on such promises down the line.

Uncertainty to Continue on the Debt Relief Front

This is precisely the thing that creates uncertainty in the markets and among investors who are keeping their fingers crossed. Considering that Greece had to be bailed out thrice since 2010 with the second bailout in 2012 and the third bailout in 2015 and the bailout reviews often ending in acrimony, the concerns of such investors are often warranted. Moreover, Germany is still opposed to debt relief whereas the IMF or the International Monetary Fund has made it the precondition for their participation in the talks.

Need for Realism from Investors

Overall, while there is some light at the end of the tunnel, the history of the Greek debt discussions should serve as a warning to all stakeholders about expecting miracles. It would be better for investors to be realistic without being pessimistic and at the same time not being overly optimistic.

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