Greece Credit Default Averted

This morning’s Global Economic Outlook report focused on the emergency Euro Summit that was to hammer out a deal to avert Greece defaulting on her debts. Crisis has been averted and additional time for drafting a deal was brokered between Greece and her creditors, reports Reuters.

Eurozone finance ministers accepted a cash-for-reform deal from Greece today but insist on a detailed study, that will take days, to determine whether or not the reforms can lead to an agreement and avert default.

Pay Up, Get Down

The ministers will reconvene later this week, to give Greece time to negotiate with its international creditors, namely the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB).

After handing in a new draft of offers for reforms to creditors, Greek Prime Minister Alexis Tsipras held talks with ECB President Mario Draghi and the IMF’s Christine Lagarde. The Greek offer bowed to creditors’ demands for higher taxation and pension reforms, including raising of retirement age to 67 and measures to “curb early retirement”. The draft also offered to reform the VAT system and to raise the main value-added-tax rate to 23 percent.

Athens is due to make a €1.6bil repayment to the IMF by 30 June or be declared in default, an event that could trigger capital controls to prevent a bank run and that will push Greece closer to an exit from the euro zone.

Capitol Controls and Bitcoin

Greek bank depositors have already withdrawn €4.2 billion in anticipation of emergency controls, prompting the European Central Bank to increase emergency liquidity assistance to banks over the weekend.

The conditions remind of the 2013 Cyprus debt crisis when citizens bypassed capital controls by expatriating their savings via the Bitcoin network.

There were no signs of a bank run, with most Greeks confident that a deal will be brokered today. Moody’s expressed concern, today, for Greek bank liquidity and the risk of “contagion”.

Life For Working Greeks

Empoyment and labor conditions in Greece have deteriorated since the start of the Greek Depression in 2009. Before the 2008 Credit Crisis, Greece’s unemployment rate was around 10%. Today, many “employed” Greeks work for no salary, in the hope of a turnaround as the statistics worsen:

Official statistics are:

  • Unemployment rate: 25.60%
  • Youth unemployment: 49.70%
  • Minimum Wages 683.76 euros per month
  • Unemployed persons: 1.3mil

Greek busines owner, Giorgios Gamanis:

There aren’t any young people, our children are all leaving, there’s no work, we’re in debt, how are we going to go on? There is no future.

This report is provided by xbt.social.

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