After a public dispute broke out last week between the IMF and Brussels, Greece’s debt was dragged back into headlines.
On one side of the argument, the International Monetary Fund. The organisation made a forecast on Greece’s debt, stating that it is ‘’explosive’’ and calling for lower budgetary targets. The third bailout program Greece has received may be retracted if Greece does not reach fiscal targets.
The other side of the spat, The European Union, who are quick to shake off the IMF’s requests for further cut backs.
The European Commission said on Monday that Greece ‘’significantly’’ beat fiscal target expectations in 2016. The Mediterranean country enjoyed a 2.7% growth in 2017, compared with 0.3% in 2016. These figures support Greece’s ability to pass the second phase of its bailout program.
Greek bonds came under fire, suffering a sharp sell-off.
Greece must repay €1.4 billion of its loan to the European Bank in April. It is not expected that the nation will be able to make the loan payment without a fresh injection of cash from the IMF.
Will Greece’s Prime Minister Alexis Tsipras hold out an olive branch when he meets with creditors? Or will Tsipras refuse to meet the criteria and call an election, which he would probably lose.
Negotiations must be made by February 20th, when the IMF is scheduled to announce whether it will continue to finance Greece’s bailout. If the IMF chooses not to inject the country with a fresh injection of cash, Greece could subside, falling back into a recession and populist movements could call for Grexit.