Europe is terrified as the time is approaching for Greece to receive the new installment of the rescue package, fearing that Athens had failed to meet the reform commitments associated with the European loans. Non-compliance means refusing to award funds needed by the government to pay its debts, which may lead to bankruptcy, a repeated concern with each new installment.
The reports and statements of European officials have increased about the lack of commitment of Greece.
A British Newspaper said today that the Greek government may be unable to repay loans worth billions of dollars payable on the 20th of August according to many data indicating that Athens has not implemented the necessary reforms, which qualifies them to receive the new installment of loan.
The Daily Telegraph added that Athens would not be able to pay Billions of dollars of bond by next month, only by the help of the European aid.
It also warned that Greece may not be able to get the aid that they need in an urgent matter, quoting many European officials saying that “Athens are far from the right track”, the track that Greece committed to follow by undertaking financial and economic reforms which will qualify it to continue receiving funds from the European aid.
Serious Possibility of Bankruptcy
The Daily Telegraph said that the British Prime Minister, David Cameron, receives daily reports on the deteriorating situation of Greece, and has been warned this week that the bankruptcy of the Greek government next month has become a serious possibility.
It quoted a senior official saying “Europe is currently paralyzing all economic initiative and the daily analysis are not promising, from Spain’s disorder to Greece possible bankruptcy”.
The Daily Telegraph said that the auditors from the European Union and the International Monetary Fund are returning to Athens this week, and those may not recommend to provide the next installment of funds without reassuring that the government reform actions and the austerity program are going satisfactorily.
It added that European officials stated that the auditors may report that Greece will not be able to pay its debt despite the reconstruction program. Athens will more likely seek to renegotiate the rescue program terms, but is unlikely to be approved by the European Union and the International Monetary Fund.
Dangerous Situation in Europe
The Daily Telegraph pointed out to the statements of the British Labor Party leader Ed Miliband that the situation in Europe has become dangerous and requires urgent action, pointing also to the crises of Spain.
In the same context, other officials in the European Union are expecting that Athens won’t be able to pay its debt, and it is likely that Greece will require reconstructing some of its debts, the cost that is required from the European Central Bank and Eurozone governments to take.
Reuters quoted unnamed officials that the auditors who conducted an assessment of Greece, which was rescued twice, would reach that it’s not on the right track
The creditors of Greece – European Central Bank and Eurozone governments – will have to reconstruct some of Greece debts which are estimated to be two hundred billion Euros, until putting the country on the right track. But there is no willingness among the Member States or the Central Bank to take such an action at this period.
The German Minister of Economy stated “it became clear that Athens did not achieve economic reform measures stipulated by the EU and the IMF to give additional aid” and the Minister said that he sees the future of Greece out of the Eurozone.
As a result of failure to meet commitments, the IMF may decide to withdraw from the bailout program after clearly announcing that it would not accept more failure in achieving the goals.
This would leave the entire burden on the countries of the Euro and European Central Bank.
In this case, the only way to prevent Greece deficit and keep it within the Eurozone is that the region countries and the Central Bank delete some of Greece’s debt, or change the conditions to allow more time for Athens to pay with less interest.
The Greek Prime Minister, Antonis Samaras, warned yesterday that his country’s economy will shrink by 7% this year from 2.8% in the previous forecast, bringing the total decline in the economy over the past five years to 20%, but he pledged to restore it and putting the country on track in 18 months.
He also confirmed that he would try to reach a deal with the creditors as soon as possible regarding the reforms in order to get the bailout money.
And after Samaras statements, the Greek government announced that it intends to merge or write off 21 government institutions, including a number of training and research institutions, and will transfer 5200 employees to other institutions.