Less than a week after International Monetary Fund chief Christine Lagarde accused the Greek government of failing to negotiate in good faith, it appears Greece, the IMF and the European Union are no closer to reaching a deal to restructure or postpone Greece’s looming debt crisis. Greece faces a massive €1.6bn payment due on June 30. The Greek government has already indicated it will not be able to make the payment, an option the IMF says is not acceptable.
The Greek government has several options. It may compromise with the European Union and the IMF and cut spending on social services as part of a wider austerity package. But according to the Greek government, the effects of such a move would be devastating. Equally important from their perspective, it would violate a central campaign promise made by the center-left government less than a year ago.
If no agreement can be reached by June 30, Greece could default on its loan payment. If Greece defaulted, it could be forced to exit the Eurozone. No country has ever left the Eurozone so it is unclear what that process would look like or who would be responsible for making that decision.
What do you think? Can Greece reach an agreement with the EU and the IMF to avoid default? What might that deal look like? Or is Greece better off defaulting on its loan payments? Why?