Greece near to a default as Athens rejects creditor’s demand for austerity

Europe’s ailing economy- Greece has further closed in on an inevitable default. Greece on late Friday has rejected a plan proposed by its creditors – the IMF and the European Council on conditions for the restructuring of loans.

Greece needs immediate money to repay its past debt to the creditors as well as emergency funds to run basic services.

The tussle between the Greek political leadership and the creditors were continuing over the last couple of weeks, with the creditors expecting Greece will come out with a plan that include stricter austerity at home.

On Thursday, the IMF that has provided one of the most concessional loans to Athens last year has walked out of any discussion with Greece. IMF which is using the funds provided by non Euro members to aid Greece is insisting better discipline from Athens. The most important one is pension reforms. Greece’s pension system is unsustainable according to the Fund and should cut pension by 1 percent of GDP.

A defiant Athens ruled by left oriented Syriza party and its leader, Prime Minister Alexis Tsipras have not shown any hint of undertaking any significant reform so as to allow the creditors further bailout money to Greece.

The European Commission and the European Central Bank were coordinating the activity to put Greece back into the prestigious currency zone and has wrested participation of the IMF in an unprecedented manner ever since Greece has shown symptoms of high indebtedness.

A critical meeting of the Eurozone Finance Ministers is to be held in next week to make a final decision on the organization’s financial package to its member. Greece is one of the members of the 19 member Eurozone that have adopted Euro as the currency.

The Eurozone members led by Germany with the help of the IMF were making consistent efforts to rescue Greece from default and a possible exit from the currency union.