Will they, wont they default? We'll find out soon....
I don't know about you but I'm fed up of hearing about Greece financial situation. The fact is, the politicians have brought this upon themselves by not bringing in tax owed and borrowing too much in the first place.
Now here's the situation they find themselves in:
1. Greece needed a bailout in order to pay their way.
2. In two weeks time (end of June) they need to make a loan repayment to the IMF of 1.6 billion Euros.
3. In order to make the above loan repayment they need to borrow a further 7.2 billion Euros, funds currently being withheld by international lenders until the reform package is agreed.
So they need to borrow money in order to pay the previous loan. That is a ponzi scheme!
If the above 1.6 billion Euro IMF repayment isn't paid by 30th June, Greece will be in default.
On Monday there is an emergency EU summit of leaders from Eurozone nations meeting to try and strike a deal, but the German Chancellor Angela Merkel has warned
"Let me make it very clear as to the expectations, such a summit can only become a summit of decisions if there is something to base a decision on. It is up to the three institutions (the ECB, IMF and European Commission) to assess this, and up to now we don't have that assessment."
So the Greeks must come up with an acceptable plan BEFORE the talks on Monday or there is nothing to talk about?
Donald Tusk, chairing the summit stated "We are close to the point where the Greek government will have to choose to accept what I believe is a good offer for support, or to head towards default."
But wait, it can't get any worse can it? Yes it can, there is already a run on the Greek banks with the people panicking into relocating their wealth away from them. Four billion Euros has been withdrawn this week alone. You can expect this to build into a fully fledged panic of withdrawals after Monday's meeting where there may not be any talking and no deal done.
This could in effect take the power away from the policy makers and cause the biggest financial crisis the Eurozone has ever seen. Greece will in this event collapse financially whether they talk or not.
If your travelling to Greece you would be well advised to take Euro cash with you. Keep an eye on the Euro rate in order to get the best deal.
Most Popular Travel Money Currencies:
- US Dollars
- Australia Dollars
- Swedish Krona
- Egyptian Pound
- South Africa Rand
- Swiss Francs
- Thai Baht
Greece has been borrowing its way to disaster long enough.
Image by Tjebe Van Tijen