IMF: Rise of SYRIZA will lead to default and an exit from the euro

 

"Polls show a growing support for SYRIZA and other anti-memorandum parties. This could lead to a political crisis, the country's default and an exit from the eurozone."

 

The IMF study shows, however, that too much austerity may prove self-defeating. Thomsen says that the IMF had advocated from the start the need to allow more time for fiscal adjustment, but notes that Greece must now continue on the path of austerity to stabilize its economy and then hope for a primary surplus of 4.5% of the GDP in 2016.

 

"There is precedent,” Thomsen says, because in the past this has been done by Belgium, Italy, and Greece as well in the late ’90s.

 

"In the past few months Greece has made impressive progress in the new coalition government in restoring fiscal sustainability and labour market reforms, providing a much needed boost to competitiveness. Overall, the government's program has yielded important results," the auditors said.

 

Concerning Greece's prospects, which is now in its sixth year of recession, Thomsen says it all depends on how well the Greek government will implement the program from now on. "This is not an easy situation. The social and political situation in Greece remains fragile, and any doubts about the government's determination could be quickly translated into a new downturn" as investors and consumers will show restraint and deposit withdrawals will reduce liquidity once again.