Is there really life after debt?
IMF keeping true to its promise of 3.6 billion euro contribution on the next installment authorized the release after the Greece passed the much-talked about austerity bills. However, the proposed debt rollover plan for them can still put the whole country in ‘effective default’.
European Union finance ministers will meet on July 8 to approve the 12 billion euro bailout plan for Greece due on July 15. Although Greece’s parliament successfully passed the austerity bills last month, its implementation are still clouded with doubt because of weak support and fear of civil unrest.
Greece still needs a second aid package, with a total of 110 billion euro, details of which is expected to be finished by mid-September. Next week, July11 finance ministers are going to discuss more long-term plans to save Greece. As such, German banks and insurers have already pledged last week to buy 3.2 billion euros of maturing bonds.
Their long-term plan apparently has something to do with convincing banks to buy 30 billion euro-worth of Greek bonds. And when all else fails, Eurozone is already preparing contingency plans, in case Greece did default.
Although, Greece must do well to remember there are no such thing as free lunch. Eurogroup’s chairman warned Greece that this help from the EU and IMF may have unpleasant consequences.
Eurozone warned of job losses and possible loss of sovereignty. Sovereignty will be limited and foreign involvement in running the country can bring more political unrest and street protests.
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