In a dramatic but widely expected step, Greece formally defaulted on a $1.7 billion payment to the International Monetary Fund. Greece became the first developed country to default to the IMF, an organization of 188 nations that tries to keep the world economy stable. Greece will now be cut off from access to IMF resources until the payment is made. Greece asked for a two-year bailout from Europe, its third in six years. The bankrupt country is reported to be asking for 29 billion euros ($32 billion). However after the tough conditions of IMF, the Greek Prime Minister has decided to go for a referendum July 5 is the day Greece may collapse or chart out a new future for itself. That day, the Greek people will vote on whether to accept or reject the tough terms of a bailout package proposed by the European Union and International Monetary Fund. . Looking at Greece from the vantage point of the world financial markets, complete collapse looks ominous. Most international stock exchanges fell by over two percent as a ripple effect of the Greece collapse was anticipated. But if you look at Greece from the vantage point of its people, if it remains resilient it could show the world a new way of dealing with the crisis. Syriza and the left-wing coalition in Greece has fulfilled its election promise by talking tough to the IFIs and EU, blaming them for the crisis and the crippling terms they are trying to force on Greece. It is said that any bailout from Europe would take time to negotiate, where without a huge shift in the Greek government’s position; a new round of talks may prove just as fruitless as the last. What any common civilian of this country should be wary of is that a withdrawal from the European Union will have a devastating impact on the already shattered economy. Asset prices will plummet, inflation will soar and unemployment will be rampant. In terms of a pure cash effect, Greece’s exit will crystallize losses on all outstanding loans from EU nations, currently standing at about 331 billion euros. With the default, and being forced out of the Eurozone, countries such as Germany and France would have to write off Greece’s debt. Many are debating, whether this default can actually plunge Europe into a crisis. While its debts are substantial, alone they are not enough to create this havoc.
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