The Wall Street Journal aptly called it Greece’s weekend curveball.
The 6-year old drama began in the last quarter of 2009. The government revealed that the budget deficit would be double the previous estimate and would touch 12% of GDP. Naturally, there were fears that Greece would default on its debts causing rating agencies such as Moody’s to categorise Greek debt as junk. Reforms were immediately unveiled to set the nation’s public finances right again.
From 2010 onwards, Greece gets multi-billion euro aid packages and implements its austerity measures.
In April 2014, Greece seems to be on the right track with a strong demand for its 5-year bonds. That turned out to be a false dawn and default fears once again cropped up in the first quarter of this year.
Today the Greek government debt is 317 billion euros with the bulk of it owned to the International Monetary Fund, European Union and European Central Bank.
Greece is now expected to default on 1.6 billion euros owed to the IMF by tomorrow. The IMF is clear that if Greece does not pay up, it won’t have access to funding until it clears up its debts. The IMF also would not help Greek banks with their immediate liquidity needs, which would have to be met by the ECB and the Bank of Greece.
BBC has put down the key dates to watch out for:
June 29: Greek banks will stay shut to avoid financial panic. The stock exchange would most probably also stay shut.
June 30: Greece’s 1.6 billion euros payment to IMF due.
July 1: No bailout programme could mean no emergency liquidity from the ECB.
July 5: Proposed Greek referendum. The citizens will vote on whether to approve a set of reforms and fiscal adjustments proposed last week to the government by the creditor institutions (the EU, ECB, and IMF).
July 10: Treasury bills worth 2 billion euros to be repaid.
July 20: Bonds worth 3.5 billion euros to be repaid to eurozone partners.
August 20: Bonds worth 3.2 billion euros to be repaid.