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Greece avoids default today, but the road ahead could be brutal

Greece narrowly staved off yet another economic crisis this week by raising enough money in a Treasury bill auction to avoid default on payment due Friday. It’s a small hurdle in a long and ugly race.

A 115-page draft report from international lenders including the IMF, the European Union, and the European Commission, helpfully posted by the Financial Times, spells out the biggest risks for Greece, even with international bailout funds from this troika of lenders secured:

Government is weak: 

The key risks concern the overall policy implementation, given that the coalition supporting the government appears fragile and some components of the program face political resistance, despite the determination of the government.

So is the economy:

Moreover, the impact on the weakened economy of the pronounced fiscal consolidation in 2013 may be stronger than currently foreseen, even though it could also be mitigated by the liquidity injection from clearance of government arrears.

Budgets could be challenged in court:

Important budgetary measures are likely to be challenged in courts, which could lead to the need to fill a fiscal gap emerging as a consequence.

Growth must pick up:

Should product and services market reforms not accelerate as foreseen under the programme, positive economic growth could not return in 2014 as foreseen.

Reforms have to be carried out: 

A return to sustained growth can only be achieved when the structural reform agenda is fully and swiftly implemented.

Vested interests have to be broken:

This will require breaking the resistance of vested interests and the prevailing rent-seeking mentality of powerful pressure groups.

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