Greece Will Default

Greece Will Default
Greece Grunge Flag Nicolas Raymond / Flickr CC BY 2.0
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It seems less and less likely that Greece will be able to avoid defaulting on its €1.6 billion loan to the International Monetary Fund, Reuters reports. According to BBC news, the loan has to be repaid by 18:00 Washington time today. In a last-minute attempt to reach a bailout agreement, European commission President Jean-Claude Juncker made Greece Prime Minister Alexis Tsipras an offer. The said offer may be key to securing what The Independent has learned to be an extra €7.2 billion worth of funds.


In the said offer, the prime minister will be asked to send a written acceptance by Tuesday, right on time for another round of emergency meeting between the Eurogroup of Euro zone finance ministers. Moreover, he also would have to express agreement towards the campaign in favor of the bailout during the July 5 referendum.

Reuters has learned that the offer included an agreement to set value added tax rates for hotel at 13% instead. This is a drastic change, compared to the original 23% that was planned in the proposal. Moreover, the said offer will also be conditional on a letter to Juncker as well as German Chancellor Angela Merkel, French President Francois Hollande and Eurogroup chairman Jeroen Dijsselbloem.

Despite the dire situation, Prime Minister Alexis Tsipras is asking the Greek people to reject the proposal, according to another Reuters report. Addressing the nation on live television, he said, “We ask you to reject it with all the might of your soul, with the greatest margin possible.” Furthermore, he also added, “If the Greek people want to proceed with austerity plans in perpetuity, which will leave us unable to lift our head… we will respect it, but we will not be the ones to carry it out.”

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Meanwhile, the U.S. stock market has also been affected by the looming deadline. CBC reports that Dow Jones was down by 350 points or about 1.9%. It is reportedly its worst performance for the year. In addition, Reuters also reports that Standard and Poor, a ratings agency, has brought down Greece’s sovereign debt rating further to CCC minus. Moreover, the said agency also believes that there’s a 50% chance that Greece will leave the Euro zone.