Greece is entering a new phase of autonomy with the end of the last financial rescue program
In the 2000s, because of the low interest rates available to the Member States of the European Union (EU), Greece got too much debt. The country was severely hit by the global financial crisis in 2008. At that time, the pressure from lenders in 2010 created a potential default risk for further increasing the cost of lending to the country.
In the light of the economic crisis in Greece, which would destabilize the euro area, the European Central Bank, the European Commission and the International Monetary Fund (IMF) provided financial assistance to the Greek government for € 220 billion.
As a counterpart to this aid, the EU and the IMF demanded that Greece adopt a rigid policy of economic austerity in order to restore financial stability and investor confidence. However, the economic crisis has become deeper.
In 2015, with the election of Alexis Tsipras of the left-wing Syriza party as prime minister, Greece threatened to leave the euro zone if no concessions were made to the policy of economic austerity. But the government supported its proposal and again accepted a $ 90 billion bailout, coupled with the demand for heavy structural economic reforms.
After eight years and three financial aid programs, Greece regains its autonomy, despite a debt of € 316 billion, equivalent to around 180% of GDP, but no longer due to international creditors and with a long credit term.
Today, the interest rate on loans on the international market is around 4.3%, a remarkable recovery of 35% in 2012, when the markets are closed for Greece. Nevertheless, it is a higher percentage than other EU countries that received financial support, such as Portugal, Spain and Ireland.
Unemployment has fallen, but the percentage is 19.5%, the highest in Europe, especially among young people. GDP increased by 1.3% in 2017 and, according to IMF forecasts, will grow by 2% this year. The level of industrial production remains 25% below the level of ten years ago.
However, as a counterpart to the rescue program, the Greek government has committed itself to maintaining the target of a primary surplus, the result of tax collection minus expenditure, with the exception of debt interest, at around 3% of GDP in 2022.
For all these reasons, the Greek government praises this new stage of economic autonomy, aware of the challenges to overcome the trauma of the long period of austerity and to protect the country from future crises.
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