The issue of debt sustainability is also a hot topic with the International Monetary fund (IMF) – which participated in Greece's two earlier bailouts – saying that Greece's debt is unsustainable and lenders targets for Greece (such as achieving a primary budget surplus of 3.5 percent of GDP in 2018). The IMF has said it is still not ready to participate in the current bailout until there are significant reforms by Greece and that its debt is sustainable.
Back in May, the Eurogroup tried to appease the IMF by agreeing a set of debt relief measures for Greece, such as extending the maturities on Greece's loans and "smoothening the repayment profile" of loans. It said such debt relief would be offered in mid-2018, however, on Greece's successful implementation of its bailout conditions.
In the meantime, Greek government bonds are still excluded from the European Central Bank's quantitative easing program, meaning that its borrowing costs are still far higher than its euro zone neighbors and adding to its struggle to recover.
Eurasia Group's Rahman forecast that Greece would continue to struggle, especially as the governing Syriza party sees its popularity drop compared to its rival New Democracy. "Syriza's loss in popularity is causing the government to delay reform; the bailout's second review will now only be concluded late this year or more likely early next," Rahman said. "Syriza's bad behavior is convenient for creditors, postponing their need to come to an agreement over debt relief," he added.