Greece has once again put itself in a difficult economic position. The last five years has seen it attempt to grapple with debts, planned reforms that never took off, and last-minute compromises that has put it in an unfavourable light in the single currency domain. Although, some have been anticipating hot-headed debates over the fiscal union and how Greece seems to threaten the current map of things, it has not really come. What has come is the fear that Greece might default it’s payments and end up exiting the Eurozone.
Looking at the past
After the restructuring of debts once in 2012, the bank owes money to other European creditors, such as European governments, the ECB and the IMF. A cut in interest rates and an elasticated maturity, aside they are doing all they can to help Greece cope but Greece needs even more relief than all of this. Greece’s government isn’t interacting much with the creditors over its future plans on how they want to pay off loans, and the situation is looking increasingly bleak.
Why no progress?
It’s not simply about a loss of faith, it is also about a government that is unwilling to engage, to lead, to negotiate over the matter. Europe’s banks are protected from the payment of debts in 2012, so they have less to worry about Greece and how exiting the EU could impact the country. They are losing patience in the process as one financial mishap after another keeps happening.
What’s in store?
There is still a long time left to repay lenders but at first the government needs to push through payment of lenders. The current government came to power on the back of promises that they are no longer going to say yes to a recession because of constantly owing money to European lenders: they are fighting the difficult climate of austerity and some MPs on the left are unwilling to back down over it.
The ECB is really not interested in seeing Greece exit the Eurozone, and ratings agencies are already saying that missed payments must not automatically equal to a Greek exit. But whether you like it or not, a greater austerity is what’s waiting Greece if it does not pay up soon enough. Investors, meanwhile were accumulating money from Greece’s undervalued assets, as a pendulum-like panic over the question over recession had gripped the country but nowadays that picture is nothing like it.
As the government pushes ahead with its agenda of denying paying creditors, as agreed to by the previous Greek government, stamina and interest over hearing more excuses over faster payments for the ECB is growing wafer thin. But before we get that far ahead, we really need to address the question of what kind of a political government is the current party in power running, if it comes to power, first promising to fight austerity, and does so by capitalizing on woes, it suggests has been inflicted upon Greek society by powerful European creditors, and second, simply arguing and erasing everything the previous government had promised?