Greece will likely fail to meet another deadline as a requirement for unlocking the next bailout.
Greece at the Edge of Crisis amid Disagreements over Bailout Reviews
The Greek financial crisis is set to repeat itself if the country, the most indebted in Europe does not comply with the terms of the previous emergency loan, threatening to bring the country to the brink of economic collapse.
On Monday, finance ministers in EU meeting in Brussels will emphasize the fact Alex Tspiras’ administration has not yet complied with the term of the emergency loan extended to Greece to keep the country’s economy from collapsing since 2010.
Greek Prime Minister Alex Tspiras had promised that a review of the bailout would be completed by March 20. However, an EU official has expressed doubt that an agreement would even be reached by April.
The government is yet to implement many of the requirements that creditor in the Greek energy market have demanded. The Tsipiras administration is also refusing to heed to calls to make cuts on the pension fund.
In August 2015, Greece received a $91 billion, which helped to end a tumultuous period in the country’s economy. While this may seem to have ‘solved’ the economic crisis, the bailout money was not released at once, as the government has to continuously comply with certain conditions.
As part of the bailouts, Greece is required to expand its budget surplus to at least 3.5 percent of gross domestic product by 2018.
Talks on how to make changes to the labor market are still underway. However, the ministry of finance set a communiqué to reporters last week saying that issues pertaining to labor could not be worked out with technocrats.
The economic crisis in Greek is now in its seventh year. It has largely been characterized by ill will among successive governments as well as a lack of substantial progress in bailout reviews.
The crisis has so far seen the Greek economy shrink by a quarter. If the current standoff is not solved before the summer Greece may be unable to pay its debt installations by mid-July.
Although Greek bonds have significantly outperformed those of other countries in the EU, there is still a lot of uncertainty over the country’s economic activity.
The uncertainty has increased the risk of yet another bailout.
In the last quarter of 2016, unemployment in Greece rose considerably. At the same time, there was a sudden contraction of the economy, and bank deposits dwindled yet again.
Speaking to Bloomberg Europe , Nicholas Economides, professor of economics at the Stern School of Business in New York said, “The recovery of the Greek economy is once again being significantly delayed by politics.
He added, “Tsipras will blink at some point; the question is when.”