Greece is looking for a bridging loan
In order to rectify the proposed bailout plan Greece needs to find the equivalent of 9 billion GB pounds in spending cuts. The Greek Government needs to put forward its planned cuts quickly as it needs to gain approval for them by the 24th July. This is the date when the IMF (International Monetary Fund) and the ECB (European Central Bank) are expected to return to Athens to confirm that the bailout proposals are on track.
The forthcoming visit will probably last until September and there is a whole lot riding on it. Decisions will be made about whether or not the European Union and the International Monetary Fund will continue their economic support of Greece. If they decide to withdraw their help, Greece will wind up in financial default which will without much doubt lead to Greece leaving the Euro Zone.
Pressure has been put on Greece to speed up proposals, by suspending the payments from the 130 billion euro rescue plan. Consequently Greece is finding itself having to ask for a bridging loan to cover various financial requirements until decisions are made in September.
The Greek Government is frantically trying to sort out spending cuts, details of which are expected to be submitted to lenders within days. These cuts are huge and represent an amount equal to 5.5 per cent of Greece’s gross domestic product. In addition these cuts have a period of just 2 years in which they need to be implemented.
The financial cut backs that Greece is looking at range from closing tax loopholes to increase the amount of tax that they receive, being more alert to the problems of fraud with regards to social spending, significant cut backs in the Government’s operating expenses and also cutbacks to healthcare. Further measures include extending the age of national service, which will mean they can make cutbacks in the rest of the military.
Being able to push through the cuts will be difficult, but the Government does seem to be determined to meet the expectations of the IMF and the European Union.