In the fall of 2013, an International Monetary Fund official stunned a number of Greek officials from state entities and ministries in central Athens by telling them that, according to his calculations, the general government must have had a liquidity surplus.
Should people who filed for retirement after mid-May 2016 receive a pension that is 25 to 40 percent lower than that collected by those who retired before that date after working the same number of years and paying the same social security contributions?
Although there is a de-escalation of Greek bond yields and spreads since the debt relief deal in June, progress has not been remarkable. Uncertainty about Italy and tumultuous emerging markets, notably Turkey, have been largely blamed for that.
Greece has been missing the targets for privatization revenues ever since it first sought a bailout from the eurozone and the International Monetary Fund in 2010. It will likely continue to do so this year and next unless the process is rethought.
Whether Greece will be able to leave behind the era of successive bailout programs and return to normalcy depends on its ability to obtain consistent access to capital markets at affordable interest rates.
Greek government officials have highlighted the importance of debt relief and international creditors have stressed the significance of structural reforms in enhancing economic growth, while fiscal policy remains a controversial point. Political uncertainty and capital controls have clouded the outlook and pundits expect the economy to fall back into recession this year; some even expect it to shrink in 2016. In this context, the sooner the banking sector assumes its role and provides credit to the economy, the better.
Greece is paying the price of a poor negotiation strategy, unrealistic expectations about economic and political reality in the European Union, the lack of progress in implementing reforms and the intransigence of some eurozone officials.