Fears of a Greek debt crisis deepens
There is currently a lot of pressure being placed on the government of Greece by the market and also some governments of the European Union to get some control over its growing deficit. There has also been some degree of social unrest in Greece over this same problem including strikes by government workers.
Should Greece default on its loans then that would have a serious effect on the euro and how strong it remains in the future. Yet the European Union and the Geek government have both come out claiming that a default is not likely. The belief here is that the Greeks can definitely fix the problem and this would involve some very sharp cutbacks and the creation of a much more competitive economy.
But this optimism does not seem to be reflected in the minds of its people. Strikes that have occurred and were planned include the tax and customs officers strike that in effect shut down certain aspects of the country’s trade and business industries and not to mention denying the government well need revenue. There are many other strikes and walk outs that are likely to occur in the coming weeks and months if the situation does not improve for workers in the country.
The government has made its pledge to reduce the country’s budget deficit from its current 12.7% of GDP to 2% by 2013. But the governments plan includes a pay freeze from government workers and an increase in the retirement age. There is also a planned fuel tax hike.
The plan set forth by the Greek government is been endorsed by the EU, which sees it is achievable. Yet the market does not seem to be too impressed with the Greek government’s plan. There are still some unanswered questions such as where the government will find the funds to support itself and its programs if the capital market has been very weary to provide it.
Greece can access funds and technical advice from the International Monetary Fund but the EU has said that this would not be needed. Yet the speculation continues.
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