How long can Greece and the EU/IMF kick the can down the road?
By Adam Pike, News Editor
05 Jun 2015
Yesterday Greece became the first industrialised country to defer a payment to the IMF as the standoff between Greece and its creditors enters the final stages.
Yesterday Greece informed the International Monetary Fund (IMF) they would not pay a 300 million euro payment due on Friday. Instead they will pay the next 4 IMF payments in one bundle at the end of June. Just how long can the debt be kicked down the road? The concept of borrowing additional funds from the IMF to pay existing IMF debt will not solve the issue of over indebtedness. The delayed payment increases the risk of a Greek default
The IMF is demanding Greece to make a series of further financial reforms and further impose austerity measures on the suffering Greek people. Greek Prime Minister, Alex Tspras, is in an impossible position. On one hand the majority of the Greek people want to remain a member of European Union but on the other don’t want further austerity placed upon them. If an agreement cannot be found Tsrpras may ask the Greek people to decide via a referendum.
Despite the increasing danger of default the gold price fell over £10 per ounce yesterday. The Greek stock market dropped 3.1% at one point, whilst yields on Greek debt rose 1.76%.
In other news which should have been positive for the gold price, the IMF downgraded their forecast for U.S. economic growth and warned the Fed against increasing interest rates.