Europe News

Could Greece talks actually beat a deadline?

A woman walks past an Alpha Bank ATM and a shopping window announcing sales in central Athens, July 21, 2015.
Yiannis Kourtoglou | Reuters

When a book is written detailing the exhaustive negotiations between Greece and its international creditors, it could easily rack up a higher page count than War and Peace. But could a crucial chapter on the country's desperately needed third bailout be finished quicker than expected?

Over the years, crucial deadlines have been approached, extended or just plain old missed, with both sides blaming the other for intransigence or economic malfeasance. Yet it looks as though this week may see a breakthrough earlier than thought, if reports that a new 86 billion euros ($94 billion) bailout deal are close to resolution are true.


Old Greek drachma banknotes are arranged for a photograph in Athens, Greece.
Greece says it's close to draft of third bailout deal

The new deal would include further government spending cuts, privatizations and reforms to the country's creaking bureaucracy. Yet the cash "is certainly not coming to Greece at zero cost", as Peter Chatwell, senior rates strategist at Mizuho International, wrote in a research note, and "the long term success of another MoU (memorandum of understanding) is doubtful".

If a new deal is agreed by negotiators and passed by the Greek government later this week, then euro zone finance ministers could sign off on it by Friday – leaving plenty of time before the country's next big debt repayment, to the European Central Bank on August 20th.


Time to stop worrying about Greece? Not yet: Pro
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New personnel on both sides, including a new Greek finance minister and a new International Monetary Fund (IMF) mission chief, may be part of the reason talks are progressing swiftly.

There is no question Greece could do with the help, after long-term mismanagement of the country's finances followed by a debt crisis and years of austerity imposed by creditors. Just weeks ago, it looked like the country would become the first to exit the euro zone, in what could have potentially spelt near-term economic disaster.

Greek stock market closes down 16% after reopening

The country's economy, as measured in gross domestic product (GDP) is expected to have shrunk by 0.7% between the first and second quarter, when euro zone GDP figures are announced later this week. This doesn't include data for July, when the country underwent a weeks-bank holiday and seemed on the brink of leaving the euro zone.

Last week, the main Greek stock market lost nearly a fifth of its value, after opening for the first time since the Prime Minister imposed a bank holiday. The closest Greece has come to a positive surprise recently is unemployment being only 25 percent.

Greece's 'nays' have it--how markets will react

There are still plenty who think that the new deal will not be enough, and that some write-off of the country'sdebt is needed.

"A transition to a sustainable debt position will require reductions in Greece's national debt through the form of a permanent fiscal transfer from the rest of the euro area," according to Simon Kirby, head of macroeconomic modelling and forecasting at NIESR.

- By CNBC's Catherine Boyle