Greece's Finance Minister, Yannis Stournaras. Photo: EPA
European finance ministers met today to discuss how to deal with the growing Greek debt crisis, with investors quavering over the due news. Yesterday, Greek lawmakers approved an austerity budget for 2013, necessary for the country to be approved for lifesaving aid. Without a loan, Greece will go bankrupt and the already unstable Euro zone could tumble into further economic despair.
The Eurogroup, the informal name for the cohort of European finance ministers meeting in Brussels this week, is expected to give Greece two more years to reach budget goals, which includes at least $10 billion in cuts. However, to comply Greece will require nearly $32 billion in emergency loans.
Greece has cut its 189 percent of GDP deficit and is making $14 billion in cuts to the federal budget in the coming fiscal year, but it appears the debt remains unsustainable. The troika (European Commission, European Central Bank, and the IMF) is awaiting a “debt sustainability analysis” before moving forward with an issuance of funds. Thus, the finance ministers will not reach an agreement on a Greek aid package today, but might meet again later this week.
Greek Finance Minister Yannis Stournaras highlighted the urgency of funds as treasury bills are due Friday, saying,
“Without the help of the European Central Bank, the refunding of these treasury bills from the banking system will lead the private sector to complete suffocation."
The country is already suffering from austerity measures, which include steep tax hikes and budget cuts. Greek citizens are experiencing an extremely difficult job market, with nearly 25 percent unemployment, and sharply increasing poverty.
After the New Democracy Party took control of the government in June, Grecians are slightly more optimistic of the economy, although the country has been rocked by demonstrations and general strikes.