As Greece looks to take the road to recovery, the latest political development in the backdrop of the ongoing economic crisis is the resignation of its Prime Minister Alexis Tsipras. Announcing his resignation late in the evening on August 20, PM Tsipras said, he felt “a moral obligation to place this deal in front of the people, to allow them to judge … both what I have achieved, and my mistakes.” Submitting his resignation to President Prokopis Pavlopoulos, he made an appeal for elections to be held at the earliest. Although an official date is yet to be decided, it is expected to be held on September 20, according to reports.
Facing rebellion by his party members, Mr Tsipras is expected to lead his leftist Syriza party in the polls. Despite facing rebellion within the party, he enjoys favourable support among the Greek voters. They believe he tried to fight imposition of austerity on the country but eventually had to give in to the circumstances. He is the most popular leader in the country at this point of time and is expected to win the elections. But his party may not get a majority on its own and will need to form a coalition government. Submitting his resignation to the President he said, “The present Parliament cannot offer a government of majority or a national unity government.”
His resignation added further political uncertainty in the markets as the Greek two year bond yields jumped 78 basis points to 12.15 percent which is considered above sustainable levels. The stock market fell by 3.5 percent. Credit rating agencies have warned that political uncertainty could hit Greece’s ability to implement tough reforms and receive any rescue packages in exchange. According to the leading credit rating agency Moody’s, “PM Tsipras’s move to step down and call snap early elections on September 20 could elevate programme implementation concerns and potentially put future official sector disbursements at risk.”
Implementing tougher reforms as imposed by the creditors is the only way out, to ensure that Greece stays in the eurozone, which a majority of the Greeks want. Mr Tsipras understands this very well.
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