UPDATE 03/07/2015: Greeks will vote in a referendum on Sunday to decide the future of their country. Ahead of the vote, what do our readers think? How do YOU think Greece should vote? Let us know in the poll below:
Greek Prime Minsiter Alexis Tsipras has called a shock referendum on reform proposals by the country’s creditors. The Greek government is formally recommending a ‘No’ vote to the proposals, and is arguing that a vote for rejection would not imperil Greek membership of the euro.
However, the most recent opinion polls point to a ‘Yes’ result, and economists warn that a Greek default within the Eurozone may be unsustainable if the ECB refuses additional funding.
The proposals from the institutions have been published online, and include reforms to VAT, pension, and public administration, as well as tax increases and budget cuts (including cuts to the Greek military budget).
In return, the institutions would have offered a five month extension on Greece’s bailout and €15.5bn in additional funding.
Greece is now expected to miss its IMF loan repayment due on 30 June. Technically, IMF rules consider non-payment as money owed in ‘arrears’ instead of a formal default, so this will not represent a ‘credit event’.
Nevertheless, alienating the IMF at this point could pose future problems for Greece if the country does indeed ultimately leave the Eurozone.
In response to Tsipras’ decision to hold a referendum on 5 July, the Eurogroup (the group of Eurozone finance ministers) have denied the Greek government’s request for a temporary extension of its bailout funding, meaning that Greece is now perilously close to bankruptcy.
In response, banks have been closed in Greece today, and capital controls will be implemented, introducing withdrawal limits of €60 per day at ATMs and restrictions on moving money abroad.
Tsipras reacted angrily to the Eurogroup’s decision in a television address, calling it an attempt to “blackmail” Greek voters:
[The Eurogroup and ECB] seek to bar the right of a sovereign people to exercise their democratic prerogative… It is clear that the objective of the Eurogroup’s and ECB’s decisions is to attempt to blackmail the will of the Greek people and to hinder democratic processes, namely holding the referendum…
How should Greece vote in the upcoming referendum? Should they reject the proposals from Greece’s creditors? Will a positive vote in a referendum provide broad support for structural reforms to the Greek economy? Or are Greek voters being blackmailed by the Eurogroup and ECB? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!