Greece, the endless crisis in Europe

We might be getting closer to another critical moment between Greece and its international creditors, as on one side, Europeans are demanding the implementation of further austerity measures in exchange of new funds and on the other side, the Greek government is struggling to find some balance between voters and creditors.

According to CNBC News, Greece will struggle without fresh payment to repay its creditors this summer, resurfacing fears that Athens could end up defaulting on its debt and, in theory, crashing out of the Euro.
On Tuesday, the Greek 2-year Bond Yield rose to near 10% in the morning – the highest level since June of last year, when there were also similar tensions between the EU and Greece. Analysts said that Tuesday’s move was due to divisions within the International Monetary Fund over the best course of action for Greece.

in a report Monday the IMF said that “most directors agreed that Greece does not require further fiscal consolidation at this time, given the impressive adjustment to date which is expected to bring the medium-term primary fiscal surplus to around 1.5% of GDP, while some directors favored a surplus of 3.5% of GDP by 2018.”
European officials want as well an agreement on the country’s fiscal strategy after the current bailout program concludes in 2018: meaning that creditors want Greece to legislate measures that will be implemented only after 2018, which means no further austerity for the time being. Claus Vistesen, chief Euro zone economist at Pantheon Macroeconomics said in a research note last week:

“If a deal is not achieved, the EU election calendar probably will make any agreement impossible until the summer. This will bring us precariously close to its next scheduled Greek 10.5 billion euro payment to its creditors.” Adding, “Experience tells us that leaving it to the last minute incentivizes politicians to play brinkmanship, with adverse consequences for the economy.”

If Greece and the European Union do not come closer in the coming weeks, we should get ready to see the same scenario.

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