Another series of "Greek drama" is already on the way. Yesterday in Athens, inspectors of the international group of creditors (the IMF and the Eurozone) began their work, on the background of another wave of protests. One of the most pressing issues is the pension reform, against which people are protesting on the streets with rather "hard" slogans in their hands. At the start of negotiations - the further financing of Greece with the third bailout package (86 billion euros).
One of the main requirements of the IMF is to reduce the pensions in order to reduce the burden on the state budget. In other words, the IMF clearly do not want to allocate money to the Greeks to maintain social benefits. In this question lies the basic contradiction between the creditors and the Greek government, as Prime Minister Alexis Tsipras insists that pensions have already been cut before, and employers' contributions to social security backgrounds has increased.
Moreover, the claims of creditors put the government to a standstill. On Thursday a general 24-hour strike is scheduled, which will be the third in a row for the current government. It has become commonplace for farmers in northern Greece to stage demonstrations, during which almost every day for several hours, they block the roads. Accordingly, if in Athens will go with the creditors' demands, the protests will only intensify, and this will increase the risk of the exit of MPs from the current coalition.
However, this time at the hands of the Greek negotiators there is very powerful trump card, namely - the situation with refugees. The work with refugees is carried out very effectively, and soon the special screening centers will be working at full strength, where the arrivals will register and be checked. Since Germany is extremely interested in solving a number of issues with the migration crisis, and much in the bailout negotiations depends on the position of Berlin, a compromise can be achieved to avoid unrest in Greece and the collapse of the government.
However, any decision would be highly problematic and painful for the population. Saving the current level of payments will result in the need to increase taxes, but it will cause discontent and protests. Reduction of social security will lead the recipients of these payments to the streets. Against this background, there is a high probability of growth of activity by populist parties that will only "add fuel to the fire" and get more people to protest on the streets.
In the short term, it is difficult to call the background for the Eurodollar positive. On Tuesday it was announced that the producer price index (PPI) came in at -0.8%, and the index comes out in the "red zone" for the seventh consecutive month. Accordingly, it clearly does not reduce the risk of rolling back to the "negative inflation" - this is what the ECB calls deflation. Perhaps news from Athens will be able to "push" the Eurodollar from the flat if the negotiations would end without explicit market progress.
RoboForex Analytical Department
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