Yesterday, on June 2nd, we saw a new stage in the relations between Greece and its international lenders. The Greek government introduced its package of economic reforms. Meanwhile, the Eurozone and the IMF worked out their own position after elimination unnecessary contradictions.
According to Bloomberg, the never-ending talks between Greece and the lenders advanced to the next level. Apparently, the parties have been trying to compromise. Eventually, Greece came up with its new package of planned reforms in the economic and financial sectors.
The market reaction was almost instantaneous - the common European currency gained 1% against the U.S. Dollar. This move brought the EURUSD exchange rate up to 1.1036. At this point, it is clear that the talks are getting closer to the end. However, it is still unclear whether the introduced reforms match the IMF and ECB’s conditions required to be compiled with in order to get another loan and save the day. We all know that if the talks fail to come to a happy end, Greece will have to quit the Eurozone.
Masterforex-V Academy reports that if the newly-created Greek coalition refuses to accept the offer, June is probably going to be the last month for Greece as a Eurozone member. In other words, the country will be forced to quit the currency union and go back to the old national currency.
Back in February, Greece promised to prepare the list of forthcoming reforms in order to comply with the conditions put forward by the international lenders. However, the promised list hasn’t been introduced so far. Instead, they suggested implementing several tax reforms, including some changes in the way the VAT is calculated. Still, the international lenders assume this is not enough to continue supporting Greece financially.
Meanwhile, Greece has less than 4 weeks to resolve the issue since the deadline is June 30th. In order to get enough time to settle accounts with the IMF, Athens will have to compromise with the lenders by mid June.
Meanwhile, more and more experts and top-ranking politicians start talking about the likelihood of Greece quoting the Eurozone. The current Greek authorities seem to become a scapegoat. They a re said to be unable to do their job properly in order to resolve the escalating crisis.
It seems like Greece will have to practice austerity once again since the budget deficit is considerable while the lenders do not want to sponsor the country anymore if there are no proper changes leading to a lower deficit and a stronger economy. So it’s high time for the Greek president to stop talking and start doing his best to save the country from an even bigger financial and political crisis if he wants to remain the president.
