Negotiations between Greece and the Institutions have picked up pace, after four months of little progress. The meeting on Monday, 1 June, of Chancellor Merkel, President Hollande, EC President Juncker, ECB President Draghi and IMF MD Lagarde provided a unified list of requirements to the Greek government aimed at completing the programme review and avoiding a crisis.
With significant payments to the IMF and ECB ahead, markets are trying to assess the outstanding gap. Nonetheless the gap is still substantial and bridging it may take longer than many expect.
"We think there are at least two critical issues outstanding: 1) agreeing on credible fiscal measures to achieve a primary surplus of c. 1% of GDP; and 2) fast-track pension reforms to reduce costs and increase the effective retirement age (currently 59). There are other relevant areas pending agreement such as labour market reforms and the privatization agenda; however, we think an agreement on these could be postponed until the third programme is discussed in the coming weeks. The imminent objective is to agree the bare minimum required to provide liquidity to the Greek Treasury and avoid default in the coming weeks." notes Barclays Capital
