When eurozone leaders agreed to a second aid programme for Greece last March, they stressed that financial help was conditional on Athens doing its homework. Six months later, the government has delivered. Yet, a stand-off between its currency union partners and the International Monetary Fund over the sustainability of the programme has left Athens waiting for the €44bn loan it was promised.
The delay will do no good and a lot of harm to the Greek economy. More than half of the payment is destined to recapitalise the banking sector, which is currently kept on life-support by the European Central Bank. While the banks remain on death row, Greek businesses will be constrained in their ability to invest and help the economy out of a deepening recession.
The political consequences of this week’s logjam are just as toxic. Official lenders are humiliating the government led by Antonis Samaras, the prime minister, who used much of his electoral capital to pass the programme of fiscal consolidation that creditors had requested. Unless the aid disbursement is approved soon, the wafer-thin majority Mr Samaras enjoys in parliament risks being further eroded. Adding to Greece’s political instability is certainly not in the eurozone’s interest.