After intense speculation over the possible consequences if Greece defaulted on its loan payments, the country has successfully made a €750 million ($834 million) payment to the International Monetary Fund one day before its first deadline.
Worries were rife within the international community, extending to speculation that the country would have to leave the eurozone. It was difficult to predict what effect this would have on the economy of other countries.
It is for now unclear how the Greek government – currently lead by Alexis Tsipras of Syriza – sourced the money. Currently Greece owes €320 billion ($360 billion), €240 billion of which is due to European bailouts. The country currently has a 177% debt-to-GDP ratio.
The Eurogroup today made an official statement on the situation, “We welcomed the progress that has been achieved so far. We note that the reorganisation and streamlining of working procedures has made an acceleration possible, and has contributed to a more substantial discussion. Once the institutions reach an agreement at staff level on the conclusion of the current review, the Eurogroup will decide on the possible disbursements of the funds outstanding under the current arrangement.”
For now, Greece has eased some fears of a complete liquidity crisis. The euro is currently trading below $1.12 level, undoubtedly affected by the financial situation. Eurogroup chairman Jeroen Dijsselbloem said there needs to be further specific agreements in place before Greece receives any further payments. Crisis averted, for now. But for Greece’s economy there is a long way to go.