(Newswire.net — July 1, 2015) — Time is up for Greece to pay its 1.6 billion Euro debt to it’s creditors, but there is still no money. In the next several days, Greeks will vote on the referendum whether they will stay in the Eurozone and accept measures from the European Central Bank (ECB) and International Monetary fund (IMF), or quit its EU membership, enter into a recession, and fope for the best on their own.
Greece is the ‘G’ in so-called PIIGS, which stand for Portugal, Ireland, Italy, Greece and Spain, according to Investopedia.com. The island of Cypress also joins the above mentioned countries that struggle with debt crisis.
World economy experts argue that Greece’s economy is too small, and that the EU would not feel the consequences of Greece leaving the Eurozone. However, they fail to see the possible domino effect that could occur if they inspire others from PIIGS to do the same, which would be a devastating blow to not only to the EU, but for the global economy as well, the Financial Times reported.
The first domino, however, doesn’t have to be from the European continent at all. Many South American countries may follow the Greek’s example and simply give up on paying their debts, calling it the ‘mission impossible’. However, for many countries the mission of paying its debt really has become impossible.
Governor of Puerto Rico, Alejandro Garcia Padilla said the island have no means to pay its $72 billion dollar debt, announcing drastic budget cuts.
“There is no other option. I would love to have an easier option. This is not politics, this is math,” Garcia told the New York Times.
Puerto Rico, with a population of 3.6 million people, has been in recession for decades, and $72 billion is much more than the nation’s GDP. According to Padilla’s spokesman Jesus Manuel Ortiz, Puerto Rico is asking to negotiate with creditors looking for delaying some debt payments.
“The last four administrations have kicked the can down the road,” said Jose Villamil, a former UN consultant, adding that a voluntary restructuring by bondholders might be the best option, AP reported.
“At this point, there is no more can to kick. So we’re going to take some very strict measures and some very profound measures. It’s going to hurt, but there’s no way out.”
In April 2014, Puerto Rico contemplated more than a hundred different proposals intended to jumpstart its sagging economy, including legalizing prostitution and marijuana use, AP reported.