The debt of Greece. Debt crisis of Greece. Prerequisites and consequences

Today the news more often mentions the external debt of Greece. And they talk about it in the context of the debt crisis and the possible default of the state. But not all our compatriots are aware of what this phenomenon is, what are its prerequisites, and what consequences it may have for not only this small country, but also the whole of Europe. About this and talk in this article.

Prerequisites

Today, Greece's external debt is over 320 billion euros. This is a huge amount. But how did it happen that this small country could owe so much money? The debt crisis in Greece began in 2010, becoming part of a similar economic phenomenon in Europe.

The reasons for this situation are very diverse. So, on the one hand, this is a regular correction of statistics and data on the economy by the government since the introduction of the euro in circulation in Greece. In addition, the public debt of Greece began to increase enormously due to the global economic crisis that broke out in 2007 . The economy of this country turned out to be especially sensitive to changes, since in many respects it depends on the service sector, namely tourism.

The first fears among investors appeared in 2009. Then it became clear that the debt of Greece is growing at a very serious and threatening rate. So, for example, if in 1999 this indicator to GDP was 94%, then in 2009 it reached 129%. Every year it increases by a very significant amount, which is many times higher than the average for other countries in the Eurozone. This led to a crisis of confidence that could not have a positive impact on the influx of investment in Greece and the growth of its GDP.

Along with this for many years, the country's budget was scarce. As a result, Greece was forced to take on new loans, which only increased its public debt. At the same time, the government of the country can not somehow regulate the situation by increasing inflation, since it does not have its own currency, and therefore can not simply print the required amount of money.

EU Assistance

In order to avoid the prospect of bankruptcy, in 2010 the Greek government was forced to ask for help from other EU member states. In a few days, due to the increased risk of default, the rating of the Greek government bonds was lowered to the "garbage" level. This led to a serious drop in the euro and the collapse of the securities market around the world.

As a result, the EU decided to allocate a tranche of 34 billion euros to help Greece.

Terms & Conditions

However, the receipt of the first part of the tranche by the country was possible only under a number of conditions. We list three main of them:

• Implementation of structural reforms;
• Implementation of austerity measures to restore the financial balance;
• The end in 2015 of privatization of the state. Assets in the amount of 50 billion euros.

The second package of financial assistance, amounting to about 130 billion, was granted under the obligation to carry out even more severe austerity measures.

In 2010, the Greek government began to implement the listed conditions, which led to a wave of mass protests by the inhabitants of the country.

Government crisis

In 2012, in May, parliamentary elections were held in Greece. However, the parties failed to form a government coalition, as representatives of the left-wing radical forces did not make concessions and spoke out against the measures of economy proposed by the European Union. Formation of the government was possible only after the repeated elections, in June 2012.

The coming to power of the party SYRIZA

As a result of the fact that the parliament, formed in 2012 after two years could not choose the president of the country, it was dissolved. Therefore, in January 2015, early elections were held, after which the party came to power SYRIZA, led by a young and ambitious politician - Alexis Tsipras. The party managed to win 36% of the vote, which provided it with 149 out of 300 seats in parliament. The coalition with SYRIZA included members of PASOK, the party "Ecological Greens" and representatives of the left-wing radicals. The main point of the electoral program of Tsipras and his associates was the refusal to sign new credit agreements with the European Union and the abolition of austerity measures. It is thanks to this that the party received such serious support from the people of Greece, whose representatives are tired of paying for the mistakes of previous governments.

Greece's external debt and the state of the country today

If a significant part of the population of the Hellenic Republic was pleased with the coming to power of SYRIZA with its program to reduce dependence on EU loans and the abolition of austerity policy, which in one way or another affected absolutely every citizen, in the European Union this news was received without much enthusiasm. So, Tsipras simply demanded to write off the state. Greece's debt to foreign creditors. With this position, neither the European Union nor the IMF agree. Already for half a year regularly meetings are held at the highest level, the purpose of which is to develop an action plan that would satisfy both sides. But so far no compromise has been achieved.

The situation has recently escalated due to the fact that before June 30, Greece must pay the IMF a loan payment of 1.6 billion euros. But if the country does not receive the next tranche of the loan in the amount of 7.2 billion euros, it simply will not have the money to pay the specified amount. However, during the meeting held on June 18, the provision of additional assistance was denied. Recall that to date, Greece's debt is more than 320 billion euros.

Thus, today the country was on the verge of default. In addition, for a long time there have been talks about the possible withdrawal of Greece from the Eurozone, as well as the introduction of a currency in this state, which will be in circulation in parallel with the euro. Anyway, the situation in this country has the most negative impact on the state of the whole EU.