Who Will Help Greece?

As Greece experiences continued economic trouble, the government recently requested assistance from the International Monetary Fund. The IMF has agreed to lend Greece massive amounts in bailout money, as did many European nations. The assistance will allow Greece to avoid default on its many debts. Many European nations willingly agreed to donate billions to Greece, but Germany, the ultimate largest loaner, was hesitant.

Continued economic troubles for Greece that would lead to defaulting on loans would be bad news for European Union nations. The potential collapse of the Greek economy is a driving factor for European nations to financially assist Greece now. This financial aid is also a method to hopefully limit monetary issues of this nature to Greece. Any spread of this economic disparity to other, financially unstable countries, would be disastrous for both the European and world economies.

Greece has a debt of 300 billion euros, which the current bailout package does not begin to cover. It does, however, allow Greece to remain afloat and avoid defaulting on their loans. This year, Greece needs 54 billion euros. They’ve gotten about half from bond and Treasury bill issues. They will need to borrow the remaining amount. Greece is counting on this loan to help them reconfigure their economic reforms. European nations have agreed to loan Greece 30 billion euros at a 5 percent interest rate. The IMF will contribute 10 billion.

Throughout the bailout discussions, Germany was hesitant to financially assist Greece. German Chancellor, Angela Merkel, stated that any of Germany’s assistance would be accompanied by strict conditions. One such condition is a savings plan between Greece and the IMF. After the discussions, Germany is ultimately the largest contributor to the bailout plan. The nations is loaning Greece 8.37 billion this year. This figure is derived through Germany’s share in the European Central Bank. Germany holds the largest share at 27.92 per cent.

After these discussions, the European nations all understand that assisting Greece is in the benefit of all European nations. Economic disparity in one European nation threatens the economic stability of all others.

The centralization of European money to the Euro made impossible the idea of devaluing currency. The method, while painful for the country’s members, is a quick way to help the economy in times of crisis. This method is not a feasible option in any European country’s trade competition, and ultimately their economy, because the devaluing of the Euro in one country would lead to problems in all other euro using countries. The bailout loans then become Greece’s best, and most feasible, choice.

The aid is not without its own troublesome questions. Many worry that Greece will simply become the first of struggling nations to ask for massive amounts in bailout money, which will further strain the European economies. European nations are also concerned that assisting Greece will try their fiscal resources. In the present world economy, no country is willing to take too many risks in loaning money. European nations worry that in assisting Greece, they are putting their own economies at risk for economic disparity.

Ultimately, the group mentality won. It is simply not feasible to have one European country suffering such financial losses. It is not beneficial to any other European economy. By in helping Greece, the European nations hope to assure stability in their own economy, and in the European economy as a whole.

Greece is still suffering huge economic losses. They are still in massive debt, and their recovery is predicted as slow; it will be years before they can be back to economic prosperity. However, the bailout plan from European countries and the IMF will allow Greece to remain afloat and not default on its many loans. The plan is the first step in Greece’s long road to economic recovery.

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