Drama in Greece continues with Tsipras calling the vote

By MoneyTimes

Aug 25, 2015 02:49 AM EDT

Greece's Prime Minister, Alexis Tsipras, resigned recently, triggering a snap election on September. This is just in time as the country is about to tap it new 86 billion bailout package.

Some view Tripras as a kamikaze democrat for rushing to a referendum on the bail-out condition that was rejected by 61 percent, prompting the government to renegotiate and get a worse deal than the previous offer.

Now he is calling for an election on September, despite all his broken promises and a dwindling majority in the parliament. It could be recalled that Tsipras and his Syriza party won in the 2014 elections promising that they would put an end to the worsening debt crisis.

Though his resignation causes uncertainty to many, especially to the creditors, it is unlikely that it will lead to the cancelation of the new bailout program.

However, Tsipras move may cause delays on the 86 billion bailout package. Without a new government before the September elections, Greece will have delays in its reforms required for the bailout.

This will lead to the delay of the creditors' first review on the country's reform developments. The review would have been on October. This will eventually hold up the payout of the following rescue loans. This will also delay negations on how to ease the debt crisis, which the creditors said would only take place after the first review.

According to ING Bank's Paolo Pizzoli, it seems that Tsipras is challenging his opponents in the Syriza party. If the prime minister fails to win the majority, any coalition can easily have a pro-bailout stance. If this happens, Greece's reform plans will be a little bit more credible.

Pizzoli said, "Under the rule of the caretaker government, which will lead Greece until the polling date, the implementation of the reforms approved by the Greek parliament will almost inevitably be delayed."

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