You can’t see it, but you can sense it. Panic is in the air as pressure is mounting for Greece to get its finances together. With barely enough cash to fund another month, Greece is in a race against time as it will need to cough up serious money in October to pay part of its previously acquired debt.
Wait a second. Isn’t Greece due to receive the next installment of its bailout package soon? Shouldn’t that help? Aye, right you are, laddie. Things would be fine and dandy if Greece were guaranteed to receive more funding.
But that isn’t the case. As of now, the next installment of its bailout package is still up in the air, and it seems as though Greece’s benefactors aren’t as eager to shell out monetary aide this time around.
Greek Finance Minister Evangelos Venizelos is certainly feeling the pressure. He recently claimed that Greece is being “threatened and humiliated” by calls for further spending cuts from the European Commission, International Monetary Fund, and European Central Bank.
As a result, Greek government officials decided to put their heads together and hold an emergency cabinet meeting over the weekend to discuss Greece’s possible courses of action. Led by Prime Minister George Papandreou, who canceled his trip to the U.S. to lead discussions, the meeting didn’t produce any new policies, but it wasn’t entirely fruitless, either.
The gathering ended with the promise to focus on spending cuts in 2012. It also gave birth to plans to implement a property tax in 2011 and 2012 to help bridge the country’s growing budget gap.
I’m pretty sure the Greeks will find these proposals as unfair as the TKO victory of Floyd “Money” Mayweather. Come to think of it, they’re already dealing with salary cuts, the negative effects of their ongoing recession, and the prospect of massive public sector layoffs.
You see, the Greek government may be forced to undo the public sector hiring that took place in 2010 and 2011 in order to lessen government spending. In March this year, Greece already promised to trim its public sector by 80,000 employees in 2015 as part of its agreement with its creditors. But with Greece still miles away from reaching its deficit targets, they are facing demands to increase their public sector layoffs to 100,000.
These proposed taxes and layoffs will most likely trigger more public protests and possibly early elections in Greece. The ruling Socialist party has been scrambling to stay on top of the debt situation with their austerity measures but to no avail. Of course, leading opposition parties are taking advantage of the ruling Socialist party’s mess and are calling for a change in government.
Aside from the Socialists’ stay in power, also at stake for Greece is the next tranche of its bailout package valued at 8 billion EUR. Unless Greece can meet the strict deficit targets, the second bailout package agreed upon in June this year could also be denied. Didn’t Greece just admit that the remaining cash in its pockets will only last until next month? Eep!
If Greece can’t avoid this series of unfortunate events, its membership in the euro zone could also be at risk. German Finance Minister Wolfgang Schäuble has been reminding Greece that there are strict requirements for being part of the euro zone, and member nations that can’t comply don’t deserve to stay.