EU finance ministers issued a severe warning to Greek Prime Minister Tsipras today that Greece will not receive any more aid until a complete economic reform plan is submitted. Reportedly, an EU finance minister referred to Yanis Varoufakis, Greek Finance Minister, as a time waster, gambler and an amateur.
Jeroen Dijsselbloem, chairman of the Eurogroup of finance ministers said 7.2 billion euros in frozen bailout funds would no longer be available after June. Dijsselbloem stated a comprehensive and detailed list of reforms is needed before any disbursement can take place. Greece’s creditors will not consider talks about longer term funding until Athens proves that it’s serious about making real reforms.
Greece and its EU partners know that the situation is dire as it has no ability to pay its debt owed to the IMF on May 12, without borrowing more money to do so. The new government admits its tax system needs to be overhauled, the pension system is failing, political corruption had decimated government funds and the labor market has been non-existent for years.
German Chancellor Angela Merkel stated on Thursday that everything must be done to prevent Greece from running out of money before it reaches a cash for reform deal with its international creditors. Merkel was asked how great the risk was of Athens running out of cash before any agreement was reached stated “everything must be undertaken to prevent that.”
There are currently trillions of dollars in derivatives at stake and neither Germany nor its EU partners are prepared to control market turmoil should Greece exit. Portugal and Spain are in dire economic straits and will absolutely demand similar treatment if Greece is let off the debt hook.
Debt always demands repayment, even in the U.S. as the 18 trillion debt clock keeps ticking.
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