Eurozone finance ministers met in Brussels on Friday for another round of negotiations to bridge the gap between Greece and its EU paymasters after Athens’ request to extend its loan program was rejected by Germany.
The emergency meetings are the third round of negotiations in two weeks between Greece and its European counterparts aimed at breaking the political deadlock over Athens’ bailout program. The newly elected Greek government has taken a hardline stance since coming to office in January, vowing not to extend the €240 billion bailout program it deems to be destructive to economic growth.
On Thursday Greece’s request for a loan extension was rejected by Germany, which is insisting that Athens stick to its original commitments. While Athens has said it will satisfy the general conditions of the loan agreement, this has not been enough to convince Germany and other Eurozone member states. According to a spokesman from Germany’s Finance Ministry, Greece’s loan extension request was “not a substantial proposal to resolve matters.”
The Greek government on Wednesday had submitted a formal request for a six-month loan extension to keep its government funded, but stopped short of agreeing to any of the terms of the larger bailout agreement. Those terms include government spending cuts, higher taxes and other economic reforms that were put in motion by the previous Greek government in 2012. The country’s lenders are the European Commission, the European Central Bank and the International Monetary Fund, referred to simply as the “troika.”
The impasse puts Greece on a collision course with insolvency should both sides fail to reach an agreement on Friday. The country’s bailout program is set to expire on February 28. Greek Prime Minister Alexis Tsipras said earlier this week his country would not fall victim to “blackmail” over bailout terms and suggested his government was prepared to vote on reforms to implement several campaign promises.
Tsipras’ far-left Syriza party has shown little willingness to compromise after securing 149 of 300 seats in the Hellenic Parliament last month. The party vowed to put an end to “cruel” austerity and raise the standard of living. Greece has shown little signs of progress since the Great Recession. Its economy contracted in the fourth quarter after posting three consecutive quarters of growth. Greece’s gross domestic product has declined by more than 25 percent since 2007. The country’s unemployment rate peaked at 28 percent in 2013.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.