Earlier in the week, it appeared that Greece might make enough changes in the offer to the IMF and European Central Bank to get an agreement to release the additional aid the country needs to pay its debts. However, the back and forth negotiations continue without a definite agreement. For months, Greece and its European creditors have been struggling to reach an agreement on the needed reforms by Greece in order to release the needed aid.
Greek Prime Minister Alex Tsipras was elected to office on anti-austerity promises he made during his campaign. It is now very difficult for him to go back on his campaign promises. The Greek people are already suffering from a 25 percent unemployment rate. The country’s economy is in dire straits.
If an agreement with creditors is not reached by the end of June, things could get even worse for Greece. They may be forced to leave the Euro Zone. Because of the impasse, Greece is currently paying over 10 percent interest on their 10-yrar bonds. The 10-year U.S. bond yield is only around 2.4 percent. If an agreement is not reached before the deadline, Greece may be paying even higher rates on new government bonds. With any luck, the two sides can reach an agreement soon.
The IMF and European Central Bank are calling for higher taxes on citizens as well as reform for pension plans. Tsipras does not want to further harm the lower income group of Greek citizens. If there are higher taxes imposed and pensions are reduced, this is the group that will suffer the most, he claims. It has been like a game of chicken over the last several months, between the two sides. In the next several days, the game will be over. Only time will tell what the final outcome is.