By: Dr. Mike Campbell
The International Monetary Fund and the Eurozone members provided Greece with a staged €110 billion loan to help the nation meet obligations stemming from its huge public debt when financing it through the market became prohibitively expensive. The bailout had strings attached which required that Greece implement some draconian austerity measures which were designed to reduce the debt burden.
IMF Athens Mission chief, Mr Poul Thomsen, has said that Greece must now implement the reforms that it has passed into law. In the IMF’s opinion, "The Greek debt is sustainable but it is, as we say, on a knife's edge," according to Thomsen. Despite the bailout, ratings agencies are fearful of a Greek default and the IMF has suggested that Greece will need a further package of €100 billion to ensure that the nation does not default. The Greek public debt stands at €350 billion. It seems increasingly likely that a second EU/IMF loan will be made available.
Words of support have come from the UK and the USA. The British Deputy Prime Minister, Nick Clegg, said "I believe we should play an active role behind the scenes, because we are not a member of the euro, to help Eurozone members make the reforms necessary to make a strong, prosperous Eurozone in the future." In his opinion, the Greek crisis couls have a direct impact on British jobs and livelihoods.
US Secretary of State, Hillary Clinton, lent her support to Greece during a visit to Athens at the weekend: "the US strongly support the Papandreou government's determination to make the necessary reforms to put Greece on a sound financial footing".
Eurozone members will convene a special summit on Thursday which will focus on the sovereign debt crisis and the provision of additional support to Greece.