Eurozone’s finance ministers will meet in Brussels on Wednesday to find a solution – whether permanent or temporary is yet to be seen – on Greece’s future.
The new Syriza government said it would stick to its electoral pledge and seek to reduce the country’s debt whilst loosen some of the fiscal policies that have been implemented over the last three years under the supervision of the Troika (ECB, IMF and European Commission).
One of the actors involved has already took action and put the squeeze on Greek banks funding. By doing so it has put considerable pressure on the political side of the table, forcing both sides – the Greek government and its institutional creditors – to reach a compromise on the bailout program.
As of today the current plan will expire on February 28 and an extension of the program (€7.2 billion of funding) will take place only if the new government will agree to stick to the existing deal. Through its Finance Minister Yanis Varoufakis, the Syriza government is asking the creation of a bridge financing, from here until the summer, to renegotiate the outstanding debt with its creditors.
Greece has to pay €7 billion to the ECB between July and August, €14.5 billion of T-bills by the end of 2015, €9.8 billion to the IMF, as well as redeem €6.7 billion of government bonds; no wonder the Prime Minister Alexis Tsipras is vocal about asking for a bridge loan – and a big one nonetheless.
Expectations of a quick resolution on Wednesday are low and the crunch talks are likely to continue the following Monday in Brussels where the next EU summit will take place.
If negotiations fail, the prospect of Greece running out of cash in March will become a reality. At this point the country will unilaterally default on the bailout program and it will be forced to leave the euro.
Both the Syriza government and the Troika have repeatedly said that Greece’s place is inside the euro and neither want to face the consequences of a country leaving the monetary union.
Greece has so far failed to find an ally among the other European countries, with Germany being first and foremost sceptic about Mr Varoufakis’ plans. France and Italy have somehow been sympathetic to a reduction of the fiscal tightening, while the Spanish government has appeared to be concerned about the effects that concessions to Greece could bring to the anti-austerity party, Podemos, which is ahead in the opinion polls.