Germany Promises Block Loan to Greece in Case of Non-Fulfillment of Austerity Terms
Athens has to choose the lesser of the two evils.
Germany will block aid to Greece in case it does not meet its obligations on austerity, Michael Fuchs, a senior lawmaker and a key political ally of Chancellor Angela Merkel said.
Fuchs said that Germany “has reached the limits of what it can bear” and is ready to veto the decision by ‘troika’ of the European Union, International Monetary Fund and European Central Bank.
Inspectors are expected to give their verdict by mid-September on whether Greece is adhering to the terms of its bail out and can receive the next installment of £25bln in rescue funds, The Daily Mail says.
Greece’s debt exceeds €130bln even after the restructuring. The economic aid is crucially vital for Greece as it is currently unable to loan at open markets. However, austerity package proposed by the EU includes cuts on social programmes and tax increase.
In spite of Athens’ accepting the austerity measures, Brussels is still sure Greece spends too much. Previously, the Greek government artificially lowered the budget deficit and concealed the real condition of its economy.
If Greece not receives the EU’s aid this autumn, the default is very probable by the end of the year as Athens has not enough means to pay the debts. However, the full austerity package will only worsen the economic situation in Greece which has been suffering from the recession for 4 years already.
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