Greece has finally successfully emerged from the last bailout program worth €61.9bn which was implemented over a period of three years. The debt had been provided by various parties in the Eurozone.
The total bail out value was about €289bn which is the biggest ever in history and which can only be re-payed over decades by Greece.
There would be continuance of the hugely unpopular cuts to public spending – one of the preconditions for the bailout.
However, Greece would be allowed to borrow at market rates for the first time in eight years.
There has bene some growth in the Greek economy even though the total size of the economy is 25 per cent smaller than what it was before the crisis.
Yemen, Libya, Venezuela and Equatorial Guinea are the only only four countries that have shrunk to a greater extent than Greece in the last decade, according to data from the International Monetary Fund (IMF).
The European Stability Mechanism (ESM) provided the last €61.9bn of the bail out as a mark of support for the economic reforms in Greece and the recapitalization of its banks.
It was back in 2010 that the bail out program was initiated as a way to provide emergency debt to Greece to revamp its economy. The first bail out amount of €20bn was provided the members states of the eurozone and the IMF. This was driven primarily by the fears that a debt crisis in Greece would be a roadblock for the effort of recovery of the European economy from the 2008 global financial crisis.
During the peak of the crisis, doubts were expressed about the stability of the eurozone. There was also a real possibility of the euro being given up by Greece and perhaps others.
The ESM which was set up by eurozone states, said that another $27bn is available as loan for Greece but there was no need for the country to avail it.
“Greece can stand on its own feet,” said ESM chairman Mario Centeno.
“The numbers are actually rising,” he says, chopping up vegetables for a huge pot to serve to those who wait. “The bailout might be ending on paper – but not in reality.”
The rate of unemployment in Greece at the height of the crisis was at 28 per cent which has come down to 19.5 present currently. There has been migration of about 300,000 Greeks to other countries in search of work since the beginning of the crisis. And for those who were dependent on state benefits had to cope with cuts in such benefits.
Currently the accumulated debt of Greece is 180 per cent of its GDP and analysts say that the economy now has stabilized.
Greece has to now strictly control public spending, run budget surplus before payment of interests at 2.2 per cent of FDP by 2060 according to a deal with the eurozone states last June.
There are estimates that Greece would still be repaying its current debt even after 2060 because of serious questions about the ability of Greece to manage its economy.
(Adapted from BBC.com)