Greece may have avoided crashing out of the euro for now by agreeing to creditors’ demands for sweeping reforms in return for cash, but economists are split on whether the deal is good for either party or even if a Grexit is off the table.
A Reuters poll of nearly 60 economists conducted in the 24 hours after news of the agreement broke showed they were skeptical whether the deal was good for both Greece and Europe.
“For Greece it’s the only deal – with a gun to their head they have to accept. For the rest of the eurozone it’s the only thinkable solution,” said Christian Lips, economist at NordLB.
Greece needs 7 billion euros by July 20 to pay the ECB and 12 billion euros by mid-August when another ECB payment falls due.
Its banking system has remained shut since last week and is teetering on the verge of collapse.
The latest agreement requires the Greek Parliament to ratify the whole package by Wednesday night and pass legislation to increase taxes, cut pensions and set aside 50 billion euros of public sector assets for sale under foreign supervision.
The problem is Greece may not have enough to sell.
A two-thirds majority in the poll, 35 of 53 economists, said Greece does not have assets worth 50 billion euros that it could feasibly privatize.
That amount is roughly a fifth of the economy and a previous attempt to raise half that much ended poorly when Athens managed to sell just a fraction of what was forecast.
“Fifty billion is very optimistic,” said Nick Stamenkovic, economist at RIA Capital Markets.
Another asked: “What are they going to do? Sell Crete?”