Athens: German finance minister said that its imperative for Greece to implement economic reforms, if it is to stay in the Eurozone. In spite of this warning, EU during its Brussels summit agreed to grant some debt relief to Greece. It is said that the decision was influenced by the shocking results of Italy’s referendum.
Wolfgang Schauble, Germany’s finance minister said that debt amount cannot be an excuse for Greece to not make reforms. Even in the past, Schauble has given stern warnings to Greece on financial improvements and debts.
Greek economy is reeling under a debt of more than 300 billion Euros and has received a bailout from EU three times. In 2015, Greece received the last chunk of of 86 billion euros. However in spite of this, the Greek economy is still in crisis. Greek leaders have said that the burden of debts is hampering the country’s development; the views not going down too well other members of the EU.
Greek finance minister has stated that the current financial situation is similar to the adverse situation of 2015. It has also been brought to light that the Greek Prime minister Alexis Tsipras has started preparing for a ‘Plan B’, if need be for a Eurozone exit.
In a meeting that took place on Monday at Brussels, the European countries have agreed to extend the deadline for Greece to repay its debt. Although the initial payback period for Greece was 28 years, it has now been extended to 32 years. It is believed that this will reduce Greece’s financial burden to a certain extent.
It is said that the reason for this extension, despite the German finance minister’s warning, is the outcome of the Italian referendum. In the referendum, people of Italy have rejected Prime Minister Matteo Renzi’s proposed constitutional reforms. The result has led to Renzi deciding to resign, thus causing a major impact to the country’s banking sector.
Many banks in Italy are burdened by huge debts and at least 2 to 3 of them would require bailouts. After Renzi’s resignation, it seems that the possibility of such bailouts has faded. Sources claim that the concession for Greece is mainly to not increase its problems further, and also to keep EU unaffected during such difficult times.