On the one hand, one of the stated aims of this funding was to help Greece restructure its debt and to pass fiscal policy reforms in order that it avoided defaulting. The IMF Article IV Consultation released in July points out the Greek economy has stabilized is that the Greek government has largely eliminated macroeconomic imbalances (IMF, p. 5). According to the OECD's 2018 Economic Survey on Greece, fiscal consolidation led to primary surpluses well above target, which is why Greece has fiscal credibility (OECD, p. 5). In June 2018, Standard and Poor's upped Greece's credit rating from B to B+. Moody's was nice enough to upgrade Greece's credit rating two levels in February 2018. Greece also has a cash buffer of over $27 billion, which means that they probably won't need market help for about two years (assuming favorable market conditions). What this means is that investors have gained confidence in Greece, Greece has access to capital markets, and can raise money on its own. These are definitely positive indicators. Although Greece seems to endured the worse of it (at least for now), the Greeks are not done with its crazy fiscal Odyssey.
The IMF was not optimistic in its outlook on the Greek economy:
"As the country exits the program era..., crisis legacies and an unfinished policy reform agenda in most areas weigh on Greece's prospects. High public debt, weak bank balance sheets, reliance on capital controls and emergency liquidity assistance, and worrisome social indicators, inducing still-high unemployment, all weigh on growth and social cohesion. "
I could stop there, but let me press on as to why the Greek economy is in calamity. For one, Greece's GDP was about a third smaller in 2017 than it was in 2010. If you look at Greece's GDP growth since 2010 (OECD), it's no wonder that this primary macroeconomic indicator is damning.
Greece still has an unemployment rate of 20 percent, and has one in four of its citizens living below the poverty line (OECD, p. 10). Greece maintains an unemployment rate that is above its European peers (OECD, p. 13). Don't forget that 48 percent of Greece's loans are non-performing, which is about 10 times higher than the rest of the European Union.
Plus, Greece is expected to maintain an average primary surplus of 2.2 percent of GDP until 2060. Given that economies go through boom and bust cycles, is it realistic to expect that Greece can maintain that growth level without inflicting financial pain on its citizens? Just take a look at what is happening in Italy or Turkey, and tell me that Greece will not somehow be affected by neighboring markets. The IMF is not confident that Greece will make it in the long-run without further debt relief (IMF, p. 10). And this doesn't take into consideration that the upcoming Greek elections increase uncertainty of fiscal reform (IMF, p. 6).
I could analyze other economic indicators, but I want to conclude by asking this: Did the bailout prevent something worse? I would like to think so. Given the IMF's well-deserved reputation of "lender of last resort," it is more than plausible. As much as I would like to think that the end of the bailout is the end of Greece's woes, I have more than a feeling that we could see another Greek tragedy on our hands.
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