"Clearly there is growing unhappiness among the Greek people about this new round of sacrifices. It is difficult for the government to enact a further round [of austerity measures] … against this backdrop of people protesting in the streets," says Domenico Lombardi, a senior fellow with the Brookings Institution. But "they have no other choice … Greece would really fall out of control."
The alternative – a default that could prompt domino defaults in other struggling countries and a credit freeze among European banks – is far too costly both to Greece and the eurozone, says Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics. European finance ministers will meet next week to decide whether to release that money.
Greece has to pass $40 billion worth of austerity measures, including further cuts to public programs and jobs and tax increases, and it has to jump start a stalled process of privatizing state assets if it is to receive the loan. It also has to rein in rampant tax evasion that has robbed the government of much-needed revenue.
The details of the newest round of cuts and taxes are not yet public, although Mr. Kirkegaard says one possibility he's heard circulating is shrinking the number of public employees by only hiring one person for every 10 people who retire from a public sector job. The government has already cut pensions by as much as 30 percent and raised the retirement age by as much as 10 years, among other things.