The latest round of Greek debt negotiations could have repercussions beyond the country's borders and impact politics across the European continent, one finance expert has suggested. Tim Edwards, a senior director of index investment strategy for S&P Dow Jones Indices, told CNBC on Monday that there are "continual crunch points" in negotiations between the euro zone and the International Monetary Fund (IMF) on the sustainability of Greek debt. Edwards suggested that, "most importantly, if the IMF withdraws will the European sovereign nations be required to themselves fill the gap and give more money to Greece?"
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The IMF said in a report Monday that "most (IMF) directors agreed that Greece does not require further fiscal consolidation at this time, given the impressive adjustment to date which is expected to bring the medium-term primary fiscal surplus to around 1.5 percent of GDP, while some directors favored a surplus of 3.5 percent of GDP by 2018." However, this split is along international lines, the official told CNBC. The current stalemate is mainly between the European creditors and Greece. The former wants to see reforms on Greece's labour and product markets as well as on the energy sector and a higher fiscal surplus, while the rest of the world is happier to cut the Athens government some slack. European officials also want an agreement on the country's fiscal strategy after the current bailout program concludes in 2018.
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After meeting his euro zone counterparts in Brussels, Finance Minister Euclid Tsakalotos said that last year's primary surplus - which excludes debt servicing costs - reached 2 percent of gross domestic product, beating a target of 0.5 percent of GDP set in its bailout plan. A Greek government official said earlier that due to this over-performance Athens was "making a much better start in 2017" in terms of state revenues.
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Without Greece implementing reforms , further disbursements are at risk. Without Greece's legislating for after the program, debt relief doesn't happen. Without a clear deal on debt relief, the IMF will not participate in the program, as least financially – something that countries such as Germany, Austria, the Netherlands and Finland want. "Patience, especially in Germany, is wearing thin," Vistesen said in the note. "Greece can't be kicked out of the euro zone, but we think that the EU will push Syriza towards the edge quicker this time. Giving Greece "a break" from the euro would not be easy to manage, but some EU politicians might prefer it," he added.