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Greek Total Debt after PSI: 280.3 Billion Euro – Only!

Greece’s unsustainable debt mountain has fallen sharply, official figures showed today, after an unprecedented private creditor writedown helped ease the burden on the struggling eurozone country.

The office of the state controller said total debt, based on indicative figures, tumbled 23.8 per cent to 280.3 billion euros ($370 billion) at the end of March compared with 368 billion euros at end-December.

The data is not final nor complete enough to meet EU criteria, a finance ministry source said, adding that when all debt is included, the figure is expected to be higher.

The sharp fall in the latest figures reflects a private-sector debt writedown worth some 107 billion euros which was included along with 130 billion euros in aid in the latest EU-IMF debt rescue agreed late last year.

The aid, in the form of loans, will in due course add to the total debt, the finance ministry source noted.

Under the agreement, Greece is supposed to see its total debt fall from the equivalent of 160 per cent of Gross Domestic Product at end-2011 to 120.5 per cent by 2020, still well above the 60-per cent EU ceiling but more manageable.

In May 2010, debt-stricken Greece secured a first EU-IMF bailout worth 110 billion euros but it was not enough to stabilise the country’s strained public finances and a second accord, including tough austerity measures, was agreed.

The accord, however, was widely rejected by voters in May 6 polls and a second election on June 17 has effectively turned into a referendum on implementation of the deal and Greece’s continued membership of the eurozone.

If the June 17 poll cannot produce a government that can live with the second debt accord, however that is managed, Athens faces the prospect of the aid lines being cut, default and then a likely exit from the euro.

PS I suppose we don’t need new measures… YUPIIII!!!!

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8 comments

  1. As it’s already mentioned in the article, the Greek debt will gradually increase as more tranches of both the €130 billion and the €110 billion bailout packages are going to be added in the years to come. The haircut imposed on private sector held bonds which were purchased under Greek law, is going to be marginally effective. The PSI will enable the Greek government to buy more time to pay back its loans and to pay less interest annually.

    I believe that the potential implementation of the following proposals could further reduce the Greek national debt. 1) A limited haircut of both IMF and ECB held Greek bonds, although I think it is less likely to materialize. 2) The possibility of issuing Eurobonds could be beneficial to Greece, but only conditionally. That is, if and only if their interest rates are less than the interest rates the IMF the EU and the ECB are charging the Greek government. 3) Allowing the Greek government to borrow money directly from the ECB at an annual interest rate of 1-2%. 4) Creating a primary budget surplus by: a) Reducing the existing rampant tax evasion, b) Collecting more unpaid taxes, c) Stop paying illegal pensions and disability benefits, d) Reducing the over prescription, the overuse, and the overpayments of pharmaceuticals and medical devices e) Conducting real competitions for military programs and for the construction of public works projects, f) Increasing the efficiency of government agencies, and g) Privatizing public companies by making sure that the sale of their bonds or stocks will be profitable for the Greek taxpayers. 5) Utilizing the recapitalization of Greek banks to increase market liquidity and to spur economic growth 6) Submitting a list of developmental projects to the European Bank for Development for funding. 7) Increasing exports while decreasing exports and promoting the consumption of Greek products. 8) Instilling a sense of security, stability and greatly promoting the natural beauties of Greece to foreign tourists. 9) Utilizing already EU approved funds for developmental projects and 10) Decreasing the unemployment rate.

    • keeptalkinggreece

      7) to increase exports first one has to create the environment for production (get rid of bureaucracy, corrupt civil servants, municipalities etc, liquitidy)
      I would add also to trim down the public sector and the state-run enterpr sector. Radically cut down DEKO pensions of 3,000E. Create state control mechanisms to secure all the above.
      and tell us how all these will happen.

      • I agree with you that bureaucratic measures not only stifle productivity but also hinder foreign investment. Producing more and more products in Greece will decrease both the unemployment rate and foreign imports.

        There should be a zero tolerance policy concerning corruption and misuse of public office. To tackle it there should be a widespread application of an effective measure. Namely, the computerized cross-verification of the stated annual income on the tax forms and living expenses, with tangible assets (foreign and Greek savings and checking accounts, currencies, precious metals, real estate,vehicles, short-term and long-term investments, etc. ), with credit card statements issued by both Greek and foreign financial institutions and with intangible assets(copyrights, patents, trademarks, computer programs, etc.).

        Restructuring of the DEKO, Greece’s stated-owned Public Companies and Organizations, through privatizations will undoubtedly encounter the stiff opposition of labor unions, because of the anticipated job losses and the reduced privileges and benefits. It will be filled with uphill, long-lasting and strenuously contested battles. But, if there is a political will there is a way.

        • keeptalkinggreece

          you do know though that the corridors of corruption and tax evasion are dark and complicated, that hardly a computerized control system could solve the problem. Further, I’d like to add that let the state make the first step with transparency at all levels, incl MPs & politicians assets of the last …20 years. Change the ministers’ protection law, investigate where did the debt money went. Let the state be a good example that the citizens can follow. Otherwise, such a comptuterized control has some oligarchy and big brother features.
          There are plenty ideas how to solve the crisis but their application in real life is another chapter Greece’s political system.

          • A computerized cross-verification system is not a panacea, or a silver bullet but only one effective measure against corruption. Other measures include, but not limited to, 1) Establishing a clearly articulated written policy prohibiting any of the employees from paying or receiving bribes and kickbacks. 2) To those who break the law to impose monetary penalties, to send them in prison and to confiscate illegally acquired properties. 3) To conduct periodic undercover police sting operations. 4) To encourage any Greek citizen to call the police and to report those who are seeking brides to provide immediate access to public hospitals, to “settle” financial audits, to provide EU subsidies for developmental projects, not to impose penalties for illegal construction activities, to choose a bid for a military program or for a public works project, etc.

          • keeptalkinggreece

            I assume, they seek bribes, not brides, right?
            BTW: are you candidate for any party?

  2. the above are monologues of IMF addicted groupies. have a look at what Argentine is doing – REVERSING privatisation.

    • I am not sure how well the state run companies and organizations in Argentina are doing right now. I know that Greek DECOs have accumulated tens of billions of euros in debt and the Greek government is balling them out by borrowing money from troika and other lenders.

      What kind of incentives state run companies have to be productive, innovative, and profitable? If their business model is to receive pay raises, to get more benefits and subsidies, to work less, to strike whenever they’re pleased to and to accumulate debt in unsustainable levels, why should the Greek taxpayers bail them out? Are we obliged to pick up the bill because they are too big to fail? Do we have to stand by them because of political considerations or political connections? Why not bail out any private company operating in the red?