With a 1.6 billion euro payment to the IMF at the end of the month, the Greek central bank has publicly warned that Greece will leave the Eurozone if it fails to reach a bailout deal with international creditors. Well, I say it’s about time.
As messy as a Greek exit could be for Europe, I believe it’s only a matter of time before the bankrupt Greek leaves the Eurozone. The simple fact of the matter is that Greece has no money to repay its creditors. Outside the 1.6 billion euro payment, Greece needs to pay another 6.7 billion euros to the ECB in July and August. Payments that the Greek government has no way of making because the Greek government quite simply do not have the money.
Seeing that as the case, the Greek government wants its creditors to wipe out some of its debts. That’s not going to happen. 3 years ago, European ministers raised the idea that if Greece applied reforms they asked for, some of its debts will be written off. Greece may have applied the reforms asked of them, but writing off the debt was never on the cards. Countries which are owned money will face fierce opposition to cancellation of the debt, and without the promise of some of its debt being waived, there’s no reason for Greece to impose even more austerity on itself.