Discussions between Greece and the European Union “Troika,” or International Monetary Fund, European Central Bank, and the European Commission, have been making progress, according to the EC. Debt inspectors have been holding discussions in order to avoid a default on Greece’s debt, and will return next week to discuss the issue further.
The “Troika” had suspended review of the country’s spending cuts plans, necessary for approval of a bailout. The review, including policy discussions, will return to Athens at the beginning of next week in order to continue reviewing the country’s situation.
A statement said, “Good progress was made and technical discussions will continue in Athens over the coming days.” This suspension of the review, which finally began at the beginning of this week, left markets in turmoil for several days.
Investors had assumed Greece had not been making progress and that the eight billion euros, or £6.9 billion additional bailout money might not have been released to the country that desperately needed it. Greece had been under sever pressure to eliminate a deficit of over two billion euros to meet the conditions of a 110 billion euro bailout from the Troika.
The country is on the verge of running out of money, which it desperately needs in order to fund public wages and pensions. Despite its austerity packages, the country is struggling to meet reduction plans or to eliminate the debt required for the bailout.
However, Greece is not the only country suffering deficit issues. Most of the nations in the eurozone have seen a slowdown in growth, and Italy had its credit rating downgraded by ratings agency Standard & Poor earlier in the week. With the growing feeling of default in Greece, countries such as Germany and France, who have proved helpful in terms of sending bailout money, are unsure whether the help is worth it.
Greece had an original bailout of the same amount in May of 2010, and was given time to deal with its economy—which it so far has not done successfully. The hope of the original bailout, as is the hope with this one, is that the crisis will be contained. However, with the downgrade of Italy’s credit rating, this is unlikely to have worked.