Greece and the euro zone might be just days away from another huge financial disaster. The International Monetary Fund, the European Central Bank and the European Union, collectively known as the Troika, on Tuesday gave the nation just 72 hours to prove it can deliver on the conditions attached to its bailout, otherwise it will not receive its next aid payment.
Unless Greece can revise its public sector spending to the satisfaction of the Troika, the nation may be forced to withdraw from the $312 billion bailout it has received, for fear of violating its own rule that the borrower must be financed up to a year ahead.
While the euro zone's sovereign debt crisis has been contained for now, this new blow could see the whole process implode as policymakers seek to find a quick solution and calm the fears of other European countries.
This new problem comes just two weeks after the Greek government nearly collapsed following the complete shutdown of state broadcaster ERT. Now, Greece is seeking to claim 8.1 billion euros of rescue loans from its creditors.
Euro zone ministers will meet on July 8 to discuss the situation in Greece at a time when other countries are also starting to feel the pressure. Portugal’s finance minister, Vitor Gaspar, resigned on Monday after imposing austerity measures that have ravaged the country’s economy, and Italy’s prime minister has called emergency talks after a coalition partner threatened to withdraw.
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If bailout inspectors cannot complete an inspection in July, they may be forced to suspend it until September, which could result in further problems for Greece.
Greece is now entering its sixth year of recession and unemployment is at an all-time high of 27 percent. Youth unemployment in the nation has climbed to about 60 percent.