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Resolving the Greek Debt Crisis: Crucial Next Steps
Resolving the Greek Debt Crisis: Crucial Next Steps
(about 2 hours later)
WHAT’S BEEN HAPPENING:
• Greece and its European creditors reached an agreement this week that aims to resolve the country’s debt crisis and keep it in the eurozone, but the deal requires Greek lawmakers to adopt more austerity measures, including tax increases and pension cuts.
• The International Monetary Fund has urged European leaders to give Greece substantial debt relief or risk having the bailout fall apart.
WHAT TO WATCH FOR:
WHAT TO WATCH FOR:
In Greece
In Greece
One of the most important components of the deal agreed to by European leaders on Monday was the requirement that Greece move quickly to pass legislation enacting economic policy changes demanded by its creditors. By the end of Wednesday, Greece must pass a set of measures that would raise value-added taxes and cut pensions, among other changes. Another set of changes must be passed by July 22. The votes are intended to show that the Greek government under Prime Minister Alexis Tsipras can hold together in the face of intense political pressure to deliver on the commitments in the bailout agreement.
• By the end of Wednesday, Greek lawmakers must pass a set of measures that would raise value-added taxes and cut pensions, among other changes. Another set of changes must be passed by July 22.
• The votes are intended to show that the Greek government can deliver on the commitments in the bailout agreement despite opposition in Parliament and in the streets.
In Germany
In Germany
If the Greek Parliament approves the policy changes, it will be a major step toward new talks over details of the bailout that Greece needs to reopen its banks and meet its debt payments. Another step would be a vote by German legislators, tentatively scheduled for Friday, authorizing negotiations on a bailout. Although Chancellor Angela Merkel of Germany helped negotiate the bailout deal, her country and her party remain split over whether Europe might be better off ushering Greece out of the European common currency. Her hard-line finance minister, Wolfgang Schäuble, has suggested this week that some members of the government still favor Greece’s departure from the euro over a third bailout in five years.
• If the Greek Parliament approves the policy changes, German legislators would vote this week on whether to move ahead with new talks on the details of the bailout.
At the I.M.F.
At the I.M.F.
The International Monetary Fund was not formally involved in the bailout agreement between Greece and its European creditors. But it, too, has lent a lot of money to Athens — $23.6 billion as of the end of June – and Greece missed a payment several weeks ago. The I.M.F. has been advocating a bailout to address Greece’s huge debt burden, but now it is suggesting that it might not be willing to lend Greece any more money if Germany and the other European lenders do not forgive some of the Greek debt or at least stretch out the repayments to make the annual interest bill less crippling. The I.M.F.’s stance is putting pressure on Germany and others to soften their positions against debt relief — and providing some hope to Greeks that they will have a new ally in debt talks.
• The International Monetary Fund, which has lent Greece at least $23.6 billion so far, has suggested that it might not lend it any more money if Germany and the other European lenders do not forgive some of the Greek debt, or at least stretch out the repayments.
• The I.M.F.’s stance is putting pressure on Germany and others to soften their positions against debt relief — and providing some hope to Greeks that they will have a new ally in debt talks.
At the Banks
At the Banks
The process of actually getting Greece the money it needs to stay afloat is likely to have several stages. The first deadline for action is Monday, when Greece needs €7 billion, about $7.7 billion, to meet debt payments and other obligations. Its creditors are working on a bridge loan to provide that money. Greece would then need €5 billion more next month. And its banks need money to reopen, something that the government keeps promising will happen quickly but that might take some time.
• Greece needs €7 billion, about $7.7 billion, to meet debt payments and other obligations. Its creditors are working on a bridge loan to provide that money. Greece would then need €5 billion more next month.
• Greece’s banks need money to reopen, something that the government keeps promising will happen quickly but that might take some time.
At the Negotiating Table
At the Negotiating Table
Assuming that lawmakers in Greece, Germany and other nations give their approval, the Greeks and their creditors will sit down to work out the details of providing Athens with as much as €86 billion in aid over three years. The question of debt renegotiation will also be on the table. While Germany and others have ruled out forgiving Greece’s debt, they are willing to discuss extending the repayment schedule or reducing interest rates. With the I.M.F. now pushing for substantial debt relief, that issue could well be the next sticking point in the crisis.
• If lawmakers in Greece, Germany and other nations give their approval, the Greeks and their creditors will work out the details of providing Athens with as much as €86 billion in aid over three years. The question of debt renegotiation will also be on the table.
• Germany and others have ruled out forgiving Greece’s debt, but they are willing to discuss extending the repayment schedule or reducing interest rates.
• With the I.M.F. now pushing for substantial debt relief, that issue could well be the next sticking point in the crisis.
