Recent political turns in Greece have sent fresh tremors across the financial markets worldwide, with concerns over the possibility of Greece moving out of the Eurozone. Political uncertainty driven by the results of the recently held general elections in the country, has been the cause of the worries among the
Greece went for the general elections during the last week for voting a new government. The results were inconclusive and none of the parties could secure a clear majority. In the wake of the divided mandate, Antonis Samaras, the leader of the New Democracy party which had got a higher share of votes, tried to
form a coalition government. However on Monday, Antonis Samaras gave up his attempt, declaring in a television address that his party had done “everything possible”, but failed to form the government. This has also resulted in a possibility of having fresh elections in the next month.
This stalemate has been the reason for worries across Europe. Economists fear that Greece might contiune without a government, and fail to secure its portion of the loans in June, forcing it to go bankrupt and out of the Euro.
It could be recalled that the ailing Greek economy was proposed to be revived with structural reforms in return for a €174bn bailout package. However it looks like the voters have given a thumbs down for this proposal, as they voted against the parties that have been driving the package. With Antonis’s New Democracy party failing to form a coalition government, the onus now lies on the leftist Syriza party to secure the helm.
Greece had earlier agreed to implement a series of tough austerity measures in an attempt to overcome the economic crisis. Some of these measures included cutting health-care spending by June 30, and to find an additional $19 billion in savings for next year. If the country fails to act on the required austerity measures, it might result in the blocking of the scheduled $39 billion bailout to be issued as the installment in June.