Greek debt saga takes a dramatic turn

New government in Greece came into power vowing to renegotiate Greek debt. Greece owes more than $271 billion mainly to the European Central Bank (ECB) and the International Monetary Fund (IMF). An installment of $1.72 billion is due to the IMF at the end of June 2015 and rumors are floating that Greece may default on its loan obligation. Greek debt is closer to 180 percent of its Gross Domestic Product (GDP). This is why the debt negotiation mantra became popular and the new leftists’ government came into power.

It appears that the ECB and the IMF is not interested in renegotiating a debt deal and appears to be hesitant to extend new credit lines to Greece. Will this lead to Greek exit of ECB as well as European Union? Exiting of the latter is more unlikely but many expect the Greece to exit the Euro Zone. Greece is also mulling an idea of putting the matter especially those very unpopular austerity measures for a vote by the people. Personality crashes are also inflicting additional pressure on negotiators from both parties. If Greek exits the Euro Zone it could lead to disaster for EU and Greece and may encourage other EU members in similar situation to do the same.