Monday, 27 August 2012

A re-build of Greek credibility

Over the weekend we all heard the news of the Greek Prime Minister, Antonis Samaras, meeting with Merkel and Hollande. The overall outcome of their meetings was positive and Samaras is now determined to re-build Greece's lost credibility.

I do not know if someone in Berlin or Athens has read what I wrote on compromise and press releases, but from what I can read in today's press the Greek Prime Minister has ordered his Finance minister to accelerate the procedures for the new 11.5 billion euro austerity measures package. Another request was that a draft of the 2013 fiscal budget should be prepared before the next Eurogroup meeting in Nicosia, Cyprus, in September 14th.

All of the above are targeted to convince Troika, which will visit Greece again in the next few weeks, and the EU of their good intentions, in order to gain a two-year debt extension. Although as I have argued before, a two-year extension might be too much to ask, a one-year one might not be too bad, especially since the Greeks will have announced the new austerity measures by then. If the new budget is also significantly improved than last year's, I would see no reason for the EU officials not to congratulate Greece with a one-year extension period. (Some political leaders in Berlin have stated in a Der Spiegel article that they might discuss a one-year extension of the Greek austerity program)

It would seem that Samaras is doing more to assist his nation than any of Greece's former leaders. Trying to re-build a long lost credibility, promote structural changes and reforms, balance a troubled budget, and restore the Greeks' belief in both their government as well as the EU. The task has been, and will be, difficult, however, I trust that will little assistance from Brussels they will be able to cope with it just fine.

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