This Sunday, July 5, Greece will hold a referendum to determine whether or not the country needs another bailout to sustain its collapsing economy. This becomes necessary following the dead lock in the country’s cash-for-reforms deal with the eurozone after months of negotiations to extend the Greek bailout beyond June 30.
The government of Prime Minister Alexis Tsipras has failed to repay a debt of £1.5 billion. As a result, banks have been shut down and a £60 cash withdrawal per day limit per an individual has been set on ATM. That also was because the European Central Bank, ECB made a decision on 28 June to freeze its £89 billion emergency cash program of keeping the banks running on Emergency Liquidity assistance. Analysts say the future of Greece in the Europena Union is bleak without a eurozone deal to resolve the impasse.
Greece is dire need of financial aid to keep its economy working. The last cash injection from international creditors was in August 2014. The five-year eurozone bailout that had been keeping its economy afloat expired on 30 June, making Greece the first developed economy to miss an IMF payment.
As the euro zone wait anxiously to see which way the pendulum swings on Sunday, citizens are already divided into two fractions in favour and against Europe’s latest cuts-for-cash bailout plan, though the offer expired on 30 June. EU leaders have warned that a “no” vote could see Greece leave the eurozone though Tsipras states that Greece’s presence in the EU was not at stake, thereby urging voters to reject the “sirens of scaremongering”. But even if Greece is to exit the Union, there is no mechanism for a country to leave, as that has never happened before. Greek Finance Minister Yanis Varoufakis, also maintains that there is no provision for any country to leave the euro, stressing that the July 5 referendum is not about Grexit (Greek Exit), but about sending a powerful message on the need for restructuring. Yet, several European leaders, including Italy’s PM Matteo Renzi and French President Francois Hollande, have warned that a “no” vote would mean Grexit.
As reports have shown, Greece’s mammoth debt now totals more than £300bn which is 180 per cent of its GDP.
The IMF has Tsipras’s government of dragging down the country’s economy with steps such as calling a halt to privatisation plans. It has also predicted that regardless of the outcome of Sunday’s referendum , the Greece will need even more cash from euro-zone countries and other sources over the next three years.