I must admit that by the end of the Greek government is not giving up. Now he decided to catch her breath, asking the International Monetary Fund (IMF) to link all the installments which had to repay in June, and regulate them at the end of the month.
He found a provision allowing for such a maneuver, enabling it to temporarily save 300 million, but of course it just postpone the problem for a short while. At the end of June you will find for the IMF a total of 1.6 billion euros in July and August threaten already kilkumiliardowe installment for the European Central Bank (ECB). Meanwhile, an agreement with the rest of the euro zone still there.
The government’s room for maneuver Alexis Ciprasa is minimal. On the one hand it is known that the European governments with Berlin at the forefront want much more than Greece suggests, and do not agree on further debt relief. Not satisfied with their further assurances on the fight against corruption and tax fraud. At the same time Cipras can not promise further raising taxes and cutting pensions, as quickly przepędziłaby by his own party, not to mention the voters. Already, the Prime Minister it is difficult to negotiate when his slip just waiting for more radical Syriza coalition politicians.
Increasingly, therefore, there are speculations about accelerated election. In them, the Greeks would have to decide – either tough stance in negotiations with Europe and the probable bankruptcy of the country including leaving the euro zone, or bending under pressure from Brussels and Berlin, a new assistance program, to avoid bankruptcy, the behavior of the euro together with the continuation of painful cuts. In this way, new elections would be a plebiscite on the future of Greece in the euro area, and perhaps in the entire European Union.
Such a radical scenario for the Greek government may be unavoidable. Indeed you can see that this time no one has the intention to give way. Syriza went to power with slogans humiliating end austerity programs. And for Germany, but also the European Commission, Prime Minister Cipras is a frivolous man who does not keep any promises and do not take our word for it. The level of mistrust between Athens and the rest of the euro area is huge.
What happens if Greece stops paying off liabilities to the IMF and other creditors? That really we do not know, because we know many examples of bankruptcies of various countries, but no country in the euro zone. Theoretically, at this moment support for Greek banks should suspend the European Central Bank. Then the whole Greek banking sector would collapse, because it functions only through a European drip. The Greeks because in fast-paced pay their savings and move them abroad. But whether the ECB actually detaches Greece drip? This is a political decision, not economic.
Besides, even formal bankruptcy does not automatically exit from the monetary union. There are no provisions that would allow day-to-day Greece throw of the bunch. Rather, it would be the decision of the Greek government. And this may, for example, try to enter the parallel currency for internal settlements (such as payment of salaries and pensions).
There is no textbook economics, which clearly would have described the proceedings in the case of insolvency of Greece. There is of course the option to introduce a new drachma, which drastically lose value against the euro. Then the Greek island would become very cheap for tourists, but the Greek economy, largely dependent on imports, touched very high inflation. This solution therefore also has serious drawbacks.
Protracted negotiations and the constant threat of bankruptcy the most harm, of course, the Greeks . But a few months ago it seemed that the country starts to finally come out straight. At this year’s projected GDP growth finally clear, and not the continuation of the recession.
Greece to improved results, although not enough to get unemployment has started to fall. But early elections, and then Ciprasa conflict with the creditors of Greece have undermined all the achievements, paid for with such enormous sacrifices of ordinary people.
The economy froze in anticipation of the settlement, tax revenues collapsed, painstakingly worked out with a budget surplus – has evaporated . Now the government is plundering the budgets of all public institutions in search of the past few euros.
Maybe a new election would not be the worst option at all? Consecutive months of uncertainty Greek economy certainly will not survive.
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