The Greek Government's decision to delay its 5 June debt repayment of €300 million to the IMF raises questions about its continued membership within the eurozone, AMP Capital says.
Greece’s left-leaning government has opted to bundle four payments due to the IMF – totalling €1.6 billion – and repay them all on 30 June.
The capacity of Greece to make the €1.6 billion payment hinges on establishing an agreement with its creditors in order to unlock €7.2 billion in financial aid.
AMP Capital head of investment strategy and chief economist Shane Oliver said‘: “Our base case remains that some sort of deal will be reached in time, but given the stresses within the Greek Government and the need for any deal to be passed by various parliaments, it is a close call.
“A missed payment later this month remains a high risk,” Mr Oliver said.
“Such a ‘Graccident’ doesn’t necessarily mean Grexit is inevitable, but Greece will likely continue to be a source of volatility through June.”
Mr Oliver pointed out that fears of a Graccident translated into a “rough week” for share markets.
Whether Greece is able to stay in the eurozone has been a topic of constant debate, with economists arguing both ability and inability to remain within the union.
“Whichever way it goes though, the threat of contagion to other peripheral countries is low compared to the 2010-2012 period as [the peripheral countries] are in far better shape now and the European Central Bank is buying bonds across Europe as part of its QE program," Mr Oliver said.