Greek Bailout on a Tightrope—Again

Greece’s third bailout is back in the hands of euro zone finance ministers, who are meeting Friday to discuss whether to go ahead with the deal—or delay it.

The baton has been passed on to Brussels after the Greek government, which had debated the reforms that need to be introduced to secure the much needed funds through the night, secured enough votes to pass the bailout bill.

However, further uncertainty was heaped on the bailout process with reports from Reuters that left-wing prime minister Alexis Tsipras seeking a vote of confidence from the parliament after August 20.

The Eurogroup of finance ministers will be meeting in Brussels to debate the latest developments in the latest 85 billion euro ($94.8 billion) bailout program for Greece.

“It’s obvious we have to sign (a bailout deal) and we have to implement this agreement,” Kostas Chrysogonos, a Syriza member of the European parliament (MEP) told CNBC Friday following the Greek vote, saying that he hoped a deal would be completed at the Eurogroup meeting later today.

A confidence vote was the last thing Greece needed right now, he added, so soon after Tsipras was elected in January.

“I’m hopeful that many of the dissenters will resign their parliamentary seats…and the confidence vote will be enough to gain the confidence of the parliament for this government. It’s obvious that the last thing that we need right now is a general election, a country that stands at the edge of default cannot afford the luxury of having a second general election within eight months.”

Although the country and its international lenders and those overseeing the program – the European Commission, European Central Bank, European Stability Mechanism (ESM) with input from the International Monetary Fund (IMF) –have agreed technical details, a political agreement in the euro zone by member state governments is now necessary before any aid is release.

But that is easier said than done with tensions running high both in Greece and Germany, Greece’s largest euro zone lender, over the bailout. This raises the possibility that the bailout deal could be delayed and Greece issued a bridging loan to tide it over – it has a 3.2 billion euro payment due to the ECB on August 20.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.