Blog #11: Greece receives more time to pay off debt

In James Neuger's article this week, is focused on the heated topic of Greece's debt crisis. It appears that German creditors have agreed to extend the due date to lower the Greek Gross Domestic Product (GDP) for another two years. By that time, the GDP should be at a "sustainable" level of 120 per cent. Until that time is reached, the decision has been made to continue flowing money through the struggling country instead of chancing a national default. If such a default were to occur, Greece would be dropped from the euro and the little amount of stability among the people would quickly become turmoil. The global market has been keeping an eye on the International Monetary Fund (IMF), especially after its objection to hold a meeting with creditors on the 20th of this month. The Managing Director, Christine Legarde, seems to disagree with the recent call to allow more time for the Greeks, saying that the aid program is not likely to promise such a safe end for the creditors. It is also questionable as to whether or not the IMF will continue to funnel money into Greece. If they choose to discontinue funding, then countries like Germany, Finland, and the Netherlands would be stuck with paying higher rates by 2016. In this case, there is a positive feel that the IMF will stick with the crisis. Germany is currently backing four countries altogether, and recent publications have insisted that the German government favours a quickened loan payout in the future for all four countries. Greece is taking steps in the right direction to trim its budget deficits, and as long as the creditors don't increase the rates on bailout loans, then they should be in the clear by 2020. This is no time for the IMF to back out now, especially in light of the promising developments of the Germans and Greeks.The fate of the euro's stability and the society's stability all rest in the hands of creditors and more importantly Christine Legarde.

http://washpost.bloomberg.com/Story?docId=1376-MDEDIN6JIJUO01-0SEME79H41VAFOTLCG9MN29OAK