Years of uncertainty and economic pain spent keeping Greece in the euro zone boils down in June to a handful of make-or-break debt repayments, while a raft of key data in the next few days will point to the progress of the global economy. The threat posed to the wider world by an eventual Greek exit from the euro may have diminished over the last few years, but last week the United States warned of an “accident” for the world economy if Greece and its creditors miss deadlines this coming month to avert a debt default.
Most analysts think Greece has enough cash and options to avoid default when a roughly 300 million euro ($330 million} payment falls due on June 5 to the International Monetary Fund. What happens in the subsequent weeks is less clear. “We believe meeting the 1.6 billion euros in payments to the IMF by the end of June will be difficult. Payments of 3.5 billion euros on bonds held by the ECB on July 20 appear even more unlikely,” said Michael Gapen, economist at Barclays.
“Without an agreement, Greece could descend into what would effectively be an exit from the euro area, where defaults and capital controls become a permanent feature.” Gauging the likelihood of a substantive agreement is difficult because of a clear difference in tone between Athens, optimistic of striking a deal soon, and its far more cautious creditors.