The origin of the Greek financial crisis can be traced back to creative bookkeeping activities which the government used to fudge the convergence criteria for joining the Euro from its inception. At the height of the Global Financial Crisis, the underlying frailties of the Greek economy could no longer be concealed, the truth emerged and the cost of Greek debt went through the roof necessitating the first of three EU/IMF bailout packages in 2010. In total, the IMF/EU lent €325 billion to Greece in a series of deals which required economic reforms and austerity cuts to be imposed, aimed at restoring the Greek economy to health (eventually). The loans given to Greece were interest bearing and must be repaid.

Greece has been given additional, limited, help by its creditors in the last week. Eurozone finance ministers agreed that an increase in the interest due on the loan package in 2017 could be waived together with other measures, such as extensions to repayment periods, which will ease the burden somewhat. The concessions have been made in recognition of efforts that Greece is making to reform its economy and reduce government spending.

The IMF would like creditors to agree to forgive some of the Greek debt as they are concerned about its sustainability. However, since the money from the Eurozone came from other EU taxpayers, there is considerable resistance to this idea, particularly from Germany. It is unthinkable that the German government would agree to let Greece benefit from such a move with German state elections scheduled for the autumn of 2017 as such a move would be hugely unpopular with German voters.

Difficulties remain over the disbursement of the next tranche of funding from the third bailout about the depth and pace of reforms. Differences remain to be resolved between Greece and its creditors over the 2018 budget plans. Once these matters have been resolved, it is likely that Greece will be granted further help over the repayments of its loans.