Greece’s Debt Crunch: Deal with the EU Unlikely This Week

Written by | Thursday, April 23rd, 2015

Greece and its creditors are unlikely to strike a deal during the Eurogroup meeting in Riga on 23 April because the government in Athens still has enough resources to continue playing for time. However, with the outlines of an eventual agreement coming into focus, Mujtaba Rahman of Eurasia Group, the world’s largest political risk consultancy firm, predicts that “an interim agreement that unlocks short term funding for Athens will come closer to the 11 May Eurogroup.” According to Mr Rahman, an eventual deal with the International Monetary Fund, European Commission and European Central Bank — which would help keep Greece within the Eurozone — is a most likely outcome of this important meeting. Still, he believes that this likely scenario doesn’t preclude an extreme crisis and maybe an introduction of capital controls to save Greece’s banking system from collapse.

The Greek government has been reported to be trying hard to get its hand on the remaining available cash that would allow it to pay salaries and pensions while starting to repay some of its debts. Yanis Varoufakis, the Greek finance minister, already admitted earlier this week that this Friday’s Eurogroup meeting is unlikely to come with any long-term sustainable solution to Greece’s predicament, though he also remains hopeful that “The convergence is clear.” The coalition government led by Tsipras’s populist Syriza Party has seen its popularity fall from around 80 percent at the beginning of this year to only 60 percent now. It is also telling that, according to the latest polls, Greek population overwhelmingly support their country staying in the Eurozone.

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