Despite yesterday’s progress, with Greece’s long list of missed deadlines, and its opposition to keeping spending cuts promises, do Greek officials feel Eurozone officials will not allow the country to default?
Greece will get the chance to put that theory to the test on 20 March, when €14.5bn (£12.13bn) in bond payments will come due. Without funding help, Greece will be forced into a disorderly default.
Greece seems to have bet that the Eurozone will not let this happen.
Pressure has mounted for Greece to address its economic shortcomings, including an inability to rein in tax evasion. But according to Nikos Lekkas, head of planning for Greece’s tax recovery system, the annual tax loss is roughly €45bn a year. This is nearly a third of the current rescue plan. Greece also promised €50bn from selling government assets over four years. So far, €1.7bn has been raised and the sale of surplus buildings and public stakes in large companies appears to have fallen by the wayside.
From its behaviour, Greece seems to think it won’t be allowed to default. The uncertainty a default would cause – not to mention the potential chain reaction in other indebted countries like Spain and Portugal – gives Greece a strong hand. It seems fully aware of this reality and has been rolling the dice one more time.
Scott Boyd, currency strategist, OANDA