Worries about Greece has recently escalated, in both Greece itself and other eurozone countries such as Germany. First on last Friday, the opposition New Democracy Party rejected the proposed tax increase by the Prime Minister George Papandreou as part of the austerity measures.
Fearing of government default that may cause bank freezing, Greece citizens started to withdraw cash from their domestic bank accounts. It was estimated some €1.5B was taken from banks in cash on last Thursday and Friday alone. Most of the withdrawals are small amounts from €2,000 to €15,000.
As discussed in the eurozone fiscal problem situations, Greece is receiving the bailout from ECB and IMF in tranches and the next trench is conditioned on meeting the fiscal targets in June. A report by German news magazine Der Spiegel, which was soon denied by Greek officials, stated that “Greece miss all agreed fiscal targets, the so-called Troika in its report , the next week to be presented, solid. The deficit in the state budget falls from higher than expected.”(google translated from German). And the PM George Papaconstantinou said:
“Negotiations continue and will be completed in the next few days. We have every reason to believe the report will be positive for the country,”
If tax increase is not approved, and Greece were to meet Fiscal Targets, selling state-owned properties seemed to be the only quick fix. However, employees in the state companies to be privatized are showing their anger by going on strike and protest on the streets.
While it is too early to conclude that Greece will default on their debt immediately after bailout is halted, it will bring about another round of unrest both on the street and the market if Greece is deemed to be missing the fiscal targets for bailouts.