On Sunday, Greek voters decisively rejected a proposal from the nation’s creditors to swap new refinancing of Greece’s 342.5 billion euro in debt in exchange for tax increases and deep cuts in public spending, especially on pensions. With the unemployment rate stuck near 26 percent and the economy sinking deeper into a depression that has already cut gross domestic product by 30 percent since 2010, Greeks decided not to bet on the idea that more austerity would return their country to prosperity.
Nonetheless, Greece missed a 1.6 billion euro payment on its debt last week and remains “in arrears,” according to the International Monetary Fund, which, along with the European Central Bank and European Commission, represents Greece’s creditors. Nearly all of Greece’s debt is held by official creditors, who bought up most of the holdings of hedge funds and other private investors years ago. Until the default is fixed, the IMF says, it won’t lend Greece more money.
With the nation once again running a budget deficit after briefly achieving a so-called primary surplus—meaning, a surplus before interest payments—Greece clearly needs more money soon. Here are some of the key questions and answers about what’s going on—and what might happen next.