Approval Of Mou In Greek Parliament Positive, But Implementation Risky: Moody’S

Oyku Altuntaş / Istanbul, Aug 17
On August 14, the Greek parliament has approved a “memorandum of understanding
“The vote is credit positive because it opens the door to a political agreement that can alleviate short-term liquidity pressures ahead of a crucial €3.4 billion repayment (consisting of amortization and interest) to the European Central Bank due Thursday, 20 August. However, because of the politically contentious requirements attached to the third bailout package, implementation risks will remain very high for the duration of the programme period until 2018” said Moody’s statement.

The “political risks” within the statement referred to media reports suggesting a call for vote of confidence in the coming days by the PM, in which a failure of a confidence vote would oblige early elections that could create political uncertainty and implementation risks.

Regarding the Eurogroup meeting on Aug. 14, Moody’s reminded that although Finland has approved the package Germany has voiced concerns about the MoU, which could delay approval of programme and the disbursement of funds.

“This uncertainty is compounded by Greek institutions’ limited capacity to implement reforms, and the significant social and political opposition to the bailout conditions” said Moody’s statement, urging the success of this third bailout package is far from certain due to liquidity risk.