Greece paying for years of debt

February 22, 2012
Viktoria Dahlrot

Early In 2010, private investors lost faith in the ability of the Greek government to repay its debt.

In order to continue functioning the Greek government had to turn to international institutions to fund itself as, in common with other Western economies, it routinely spends more than it takes in tax.

Greece, however, is far more indebted than other countries. In 2010 debt as a percentage of GDP reached 145 per cent, which finally caused private capital markets to seize up. The IMF and ECB have since funded the Greek government with a series of bailout packages. Approval of the latest was last week, subject to days of wrangling.
Last Wednesday, European finance ministers postponed a meeting that was meant to confirm the latest round of funding. “I did not receive the required political assurances”, Jean-Claude Juncker, chairman of the Eurozone finance ministers approving the loans, said at the time.

Opposition leader Antonis Samaras had threatened to renege on the conditions previously agreed to by the Greek government if elected Prime Minister. His party is favourite to win the next general election, expected in April.
The leaders of the two major political parties have, however, since guaranteed to follow the pact. Additionally the government has moved to establish plans to deal with its €325 billion fiscal gap for this year; further cuts will be levelled on health, defence and local government spending, and the minimum wage is set to be cut by 20 per cent.

Greece is facing unrest as citizens rebel against enforced austerity. Unemployment has grown above 20 per cent, continuing an inexorable rise that began in January 2008, when it was below eight per cent.After the austerity plan was passed on Sunday Greek citizens took to the streets, with 80,000 protesting in Athens. Demonstrators threw rocks and petrol cans at the police. Trade unions have announced 48 hour strikes.

Christos Papoutsis, Greece’s Civil Protection Minister, commented on the strikes, saying: “Greece is making all the necessary efforts and the people can’t take it any more.”

There is increasing doubt that Greece will be able to continue to enforce austerity on its people with widespread protests. Greece looks set to continue to dominate the agenda as the European Council prepares to meet again on 1st March.

Nouse.co.uk is powered by WordPress. Designed and developed by Andrew Fairbairn, Jonathan Frost and the Nouse technical team.