Eurozone officials have declared that a decision on a new Greek bailout could be reached by its creditors on Friday, with many being optimistic regarding a favorable ruling after the Greek government decided to give in to many of their demands in the latest negotiated proposal.
Three institutions are overseeing the new Greek bailout proposal – the International Monetary Fund, the European Commission and the European Central Bank. The three creditors might offer an assessment of the Greek request for another bailout on Friday – which, if favorable, would avoid total economic collapse in the country and its exit from the Eurozone.
The situation is certainly looking better than at the beginning of the week, after a national referendum which rejected creditor demands offered the distinct impression that the country and its creditors would fail to reach middle ground in time. However, a new proposal sent by the Greek government Thursday night accepted or came close to many of the initial demands, including a controversial VAT increase and several budget cuts.
The deadline for the bailout agreement has been set for Sunday, when the Eurozone leaders will hold an emergency summit in Brussels. If no agreement is reached until then, Greece could default on its European Central Bank debt and be excluded from the euro currency, returning to its old drahma-based system. However, if the assessment does come out on Friday and is positive, the bailout could be approved as early as Saturday, when another Eurogroup meeting is scheduled, which would make Sunday’s summit obsolete.
Many European leaders have stated their optimism with regards to the latest Greek proposals, with French president Francois Hollande considering the program “serious and credible” and also respectful of European rules. Matteo Renzi, Italy’s Prime Minister, also said that there is certainly more optimism regarding a deal with Greece at this moment than in the past.
The news comes as the situation in Greece is expected to clarify itself one way or another until the start of next week, as the Athens government extended closures of Greek banks and a $66 personal daily withdrawal limit on ATMs until next week. The measure cannot be prolonged anymore as Greek banks, already closed for two weeks now, will run out of liquidity in the next couple of days, driving them out of business and probably sending the country on the path to full economic collapse.
Image Source: Wall Street Journal