Grexit Fears Spike Amid Looming Deadline
Greece remains front and centre of European politics, given the exigency of the upcoming debt repayment deadline. Come Tuesday June 30, the Greek government will likely be in default unless it makes repayments to its international creditors.
High-level meetings have failed to secure agreement between the new Greek government and its European lenders. The Greeks simply refuse to make cuts to pensions, and other vital austerity measures.
Unsuccessful talks with European finance ministers have left the threat of a €1.6 billion International Monetary Fund (IMF) debt repayment crisis on the cards. The Germans have already voiced their displeasure at the direction of the talks and fears are rife that a default could severely impact a slowly recovering eurozone economy.
What’s at stake for Greece is an avalanche of bailout funds. Three international bodies must agree with the terms of debt repayment, including the IMF, the ECB and the EC. If consensus can be reached, the Greeks will receive the much needed €7.2 billion to keep the country running. The Greeks have met with EU finance ministers 5 times in a week to avoid a debt default – to no avail.
Greek Intransigence Remains a Stumbling Block
The Greek proposals are contrary to what the IMF has been advocating. The Greek offer is one which promotes tax hikes over austerity measures focused on spending reductions. The Greek economy simply cannot maintain its debt burden, and adding additional taxes will aggravate rather than alleviate the crisis.
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And then there’s the internal politics of the Greek parliament. Tsipras ran on a campaign promise of no austerity, and if he attempts to back away from that a mutiny could befall his party’s rule. The latest consensus from talking heads seems to suggest that if a Grexit isn’t on the cards, Greece’s position in the Eurozone is teetering.
It is absolutely clear that a week of extreme economic and political turbulence lies ahead and the outcome is as uncertain as ever. The EU believes it can withstand the shock of a Grexit and the €320 billion of unrepaid debt held by various member states and international bodies.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]