Greece's current debt amounts to € 320 billion. This is almost twice higher than the country's GDP of € 181 billion. At that, effects of the economic difficulties are currently being felt across the country, writes The Financial Times.
Unemployment rate among people aged 15-24 has increased from 23% in 2008 to 44% in 2016, which is an "anti-record" in the EU. One-fifth of Greeks cannot afford a telephone line and heating.
In 2015, 15% of Greece's population lived in extreme poverty, while in 2009 this figure was equal to 2%, Greek agency Dianeosis calculated. "There are families who have nothing to eat - told a local resident. - That's why I am gifting bread to those who need it most."
Retired pays have been reduced by 40% last year. Taxes, on the contrary, have grown. This year, Greece is expected to receive € 1 billion in new taxes on cars, telecommunications, television, fuel, cigarettes, coffee and beer. At that, cuts on salaries and pensions will amount to € 5,7 bln.
The repayment plan
Greece wants to negotiate the Eurogroup’s finance program to qualify for purchase of bonds of the European Central Bank (ECB), and become able to refinance its debt in August 2018, as told Greek government spokesman Dimitris Tzanakopoulos. According to him, Athens now are waiting for "recognition of progress" since the reconciliation process has been going on for several months.
At that, the government hopes that meeting of the euro zone finance ministers, scheduled in this month, will help to speed up negotiations with creditors. The talks have been delayed for months due to disagreements on reforms and measures for debt repayment, said Tzanakopoulos.
Moreover, Greece is ready to discuss with the International Monetary Fund (IMF) fiscal measures in the event of unforeseen circumstances.
"We will do it just to change the IMF’s very pessimistic forecasts in relation to our country", - added Tzanakopoulos.
The International Monetary Fund itself intends to participate in the program of the last financial assistance to Greece, writes Bloomberg. At the International Economic Forum in Davos, German Finance Minister Wolfgang Schaeuble hinted that he would stop the bailout program, if the IMF refused further participation in assistance to Greece. Then, Christine Lagarde, Managing Director of the Fund, announced her intention to support the Greeks.
"The Fund will be fully involved in the discussions, with a view to reaching early agreement on the program, which can provide support for use of the fund’s resources," – commented the institution.
How it all began
Plight of the Greeks has lasted more than eight years. In 2009, the government announced that the budget deficit climbed to 12.9% of GDP, which almost five times exceeded the EU’s limit of 3%. Fitch and Moody's rating agencies immediately lowered Greece's credit ratings, which in turn, scared investors off.
In 2010, Greece announced an austerity regime in the country. The indebted state’s government planned that the roadmap could reduce the budget deficit to 3% in two years. However, four months later, Athens said that the country is on the verge of default. Then the EU and the IMF gave Greece a loan of € 240 billion under the financial assistance program.
However, it was only enough to pay interest on its debt and to keep the banks afloat.
Tough austerity measures have resulted in an opposite effect. Rate of economic growth slowed down, and, consequently, with tax revenues necessary to repay the debt fell down. All this led to growing unemployed and rioting in the streets.
In 2011, the European Financial Stability Fund granted Greece with a loan of € 190 billion. By 2012, the debt to GDP ratio rose to 175%, which was almost three times higher than the EU's limit of 60%.
In the summer of 2015, Greece teetered on the edge of the financial abyss. The EU said that collapse of the country could harm the entire Europe. Then, after several months of political confrontation, Greeks were granted a third loan in the amount of € 86 billion for five years.
source: ft.com, reuters.com, bloomberg.com
Unemployment rate among people aged 15-24 has increased from 23% in 2008 to 44% in 2016, which is an "anti-record" in the EU. One-fifth of Greeks cannot afford a telephone line and heating.
In 2015, 15% of Greece's population lived in extreme poverty, while in 2009 this figure was equal to 2%, Greek agency Dianeosis calculated. "There are families who have nothing to eat - told a local resident. - That's why I am gifting bread to those who need it most."
Retired pays have been reduced by 40% last year. Taxes, on the contrary, have grown. This year, Greece is expected to receive € 1 billion in new taxes on cars, telecommunications, television, fuel, cigarettes, coffee and beer. At that, cuts on salaries and pensions will amount to € 5,7 bln.
The repayment plan
Greece wants to negotiate the Eurogroup’s finance program to qualify for purchase of bonds of the European Central Bank (ECB), and become able to refinance its debt in August 2018, as told Greek government spokesman Dimitris Tzanakopoulos. According to him, Athens now are waiting for "recognition of progress" since the reconciliation process has been going on for several months.
At that, the government hopes that meeting of the euro zone finance ministers, scheduled in this month, will help to speed up negotiations with creditors. The talks have been delayed for months due to disagreements on reforms and measures for debt repayment, said Tzanakopoulos.
Moreover, Greece is ready to discuss with the International Monetary Fund (IMF) fiscal measures in the event of unforeseen circumstances.
"We will do it just to change the IMF’s very pessimistic forecasts in relation to our country", - added Tzanakopoulos.
The International Monetary Fund itself intends to participate in the program of the last financial assistance to Greece, writes Bloomberg. At the International Economic Forum in Davos, German Finance Minister Wolfgang Schaeuble hinted that he would stop the bailout program, if the IMF refused further participation in assistance to Greece. Then, Christine Lagarde, Managing Director of the Fund, announced her intention to support the Greeks.
"The Fund will be fully involved in the discussions, with a view to reaching early agreement on the program, which can provide support for use of the fund’s resources," – commented the institution.
How it all began
Plight of the Greeks has lasted more than eight years. In 2009, the government announced that the budget deficit climbed to 12.9% of GDP, which almost five times exceeded the EU’s limit of 3%. Fitch and Moody's rating agencies immediately lowered Greece's credit ratings, which in turn, scared investors off.
In 2010, Greece announced an austerity regime in the country. The indebted state’s government planned that the roadmap could reduce the budget deficit to 3% in two years. However, four months later, Athens said that the country is on the verge of default. Then the EU and the IMF gave Greece a loan of € 240 billion under the financial assistance program.
However, it was only enough to pay interest on its debt and to keep the banks afloat.
Tough austerity measures have resulted in an opposite effect. Rate of economic growth slowed down, and, consequently, with tax revenues necessary to repay the debt fell down. All this led to growing unemployed and rioting in the streets.
In 2011, the European Financial Stability Fund granted Greece with a loan of € 190 billion. By 2012, the debt to GDP ratio rose to 175%, which was almost three times higher than the EU's limit of 60%.
In the summer of 2015, Greece teetered on the edge of the financial abyss. The EU said that collapse of the country could harm the entire Europe. Then, after several months of political confrontation, Greeks were granted a third loan in the amount of € 86 billion for five years.
source: ft.com, reuters.com, bloomberg.com