THE SUMMER of 2015 saw the climax of the Greek debt crisis when the protracted impasse between the newly elected, radical-left Greek government and its European creditors ended with a referendum of Greek voters that decisively rejected the terms of an international bailout.
Despite the drama and with the threat of the much-feared Grexit, the Greek government managed to secure a bailout package entitling them to 86 billion euros (Bt3.2 trillion) in rescue funds.
Since the 2015 bailout, things have started to improve.
Greece has achieved and maintained a primary fiscal surplus, eliminating the need to borrow more funds other than to repay maturing debt and interest.
It also managed to get rid of the large current account deficit, implying that the economy as a whole can function without a need for foreign funding.
Everybody thought that was the end of the multiyear-long Greek debt drama.
But come 2017, the Greek drama could be getting a fresh “remake”.
Although the €86-billion bailout package could cover the country’s financing needs for the next several years, the funds do not get released all at once.
Behind the scenes, creditors continue to monitor its economic performance and assess whether its government meets strict fiscal targets before unlocking the financial tap.
So far, the disbursement of the funds has been delayed and there are concerns that the IMF will pull out of the programme, as they assess that the austerity measures imposed on Greece by European creditors are weighing too much on economic growth and are unsustainable.
Greece has to meet a €8.3 billion bond redemption in July and needs financial aid to be released by that time to avoid a default.
Greece is one of the many moving parts that could break down this year in fragile European politics, including the busy election schedule over the coming months, starting with the Netherlands in mid-March, then France in late April and ending up with Germany in late September.
Italy could also go to the polls in September if the government chooses to call a snap election.
The Brexit talks, which involve complicated negotiations over trade deals, and the sensitive immigration issues are also expected to begin in a few weeks.
However, it is reasonable to expect that a compromise will finally emerge because, after years of providing Greece with a financial lifeline, the eurozone is now the largest creditor of the country.
In fact, three-quarters of the €11 billion bonds maturing this year, excluding treasury bills, are held by European public institutions including the European Central Bank and the European Stability Mechanism.
So, the disbursement of the financial aid will practically mean they loan money to Greece to repay themselves.
KOMSORN PRAKOBPHOL, head of strategy at the Tisco Economic Strategy Unit, can be reached at www.tiscowealth.com or firstname.lastname@example.org.