Now that Greece has some semblance of government again, the troika returns to Athens in the coming days to learn how the country is progressing with its efforts to meet the bailout targets. It is almost certain to be disappointed. Prime Minister Samaras suggested over the weekend that Greece was in a deep depression. Together with the extraordinary inefficiency and corruption at the heart of tax collection in Greece - not to mention the culture of tax-avoidance - the troika will discover that government revenue is well short of expectations.
For its part, Germany seems increasingly prepared to cut Greece loose. Vice Chancellor Roesler stated yesterday that Greece cannot receive any more payments unless it meets its obligations. To make his position crystal clear, Roesler said that he was “very sceptical” that Greece could be rescued and that the fear of Greece’s exit from the euro no longer terrorises like it used to. The IMF froze any further disbursements to Greece back in March and will not even consider giving the country any more funds until the troika reports back next month. Last week, the new government announced EUR 11.5bn of spending cuts, although exactly where the axe will fall is not yet clear. Finance Minister Stournaras will present this latest package of measures to the troika later this week. Greece needs the funds in order to pay back a bond maturing in August; most of this bond is owned by the ECB.
Speculation regarding a Greek exit from the euro is likely to become feverish again in the near term.