Financial Assistance or Debt Relief for Greece?
Over many years it has been known that governments do not default on their debt repayments. People do. This believe is fast fading considering that apart from Greece, there are four other countries which have defaulted on their repayments. These are: Argentina, Ecuador, Belize and Jamaica.
On this article we will focus on the developments in Greece. The country has in the past operated under different regimes of austerity. The naked capitalism calls this a competition among peanuts on who is the tallest. Same.
The International Monetary Fund (IMF) has been pushing other countries such as Germany to reduce debt for Greece. The staff at IMF have been debating internally whether they should continue bailing out Greece.
A number of documents leaked from the IMF points out that Greece may not be able to pay off its debts. This is double standards since the rules of IMF are clear. Only countries which have the ability to repay should be loaned money. It is not common to give more debts for countries which are struggling to repay their existing debts.
Germany is so ashamed to admit that the loans to Greece are bad debts. Write-offs is the answer. How will this information be received by voters considering that the elections are around the corner?
Greece is facing another bailout deadline at the beginning of July, 2017.
Finance Ministers from the European Union and IMF representatives are working out on yet another bail-out plan. These discussions are happening and debt relief talks are being delayed.
IMF has clarified that Greece needs another bailout to recover. Greece was able to meet the conditions set in the previous bailout plan albeit with a lot of pain domestically.
Greece is a thorn on the flesh for the Euro group. Talking about debt relief is very sensitive for countries with elections looming around the corner.
Internally, the Greek parliament has engaged in tough negotiations before reaching a consensus that they need debt relief. The street protests made the parliamentarians to work hard to reach a middle ground.
Since 2008 Greece has undergone social collapse due to unfavorable economic conditions. This has made the country vulnerable to decisions made by the Eurogroup. Debt relief will create hope for Greeks.
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