Greece remained in the spotlight this week amid confusing and contradictory statements. The Greek government claimed that an agreement was within reach, while officials from creditor countries and the IMF warned that a deal that would unlock the remaining EUR7.2bn of the second bailout was not imminent, and that significant disagreements remained.
It looks like there has been some progress, but not enough to pave the way for a political deal. The IMF is keeping a hard stance and a senior G7 official said the two sides were still far apart, making a deal over the weekend and a Eurogroup meeting? at the beginning of next week unlikely.
Discussions will now focus on this year's fiscal gap, pension reform and the liberalization of the product market. The IMF also said that some form of debt relief would be necessary to restore debt sustainability, a controversial issue for some European member states.
"The Greek government seems to be trying to emphasize the disagreements between the IMF and the EU, which we think may be a dangerous strategy as it risks delaying a final accord and increasing the risk of an accident. We still expect a deal to be reached in time to avoid a default and a Greek exit from the single currency, but we acknowledge that the risk of an accident remains high." notes Barclays
