With three international bailouts of 326 billion euros ($370.68 billion) ending on Aug. 20 after more than eight years, Greece can expect that scrutiny of the economy will go on for years to insure fiscal targets are hit and there’s no reneging on austerity and reforms.
Greece will be monitored more closely by the European Stability Mechanism (ESM) and its Troika partners, the European Union and European Central Bank (ECB) that put up 86 billion euros ($97.79 billion) in a third rescue package in the summer of 2015.
The Washington, D.C.-based International Monetary Fund (IMF), which took part in two first bailouts of 240 billion euros ($272.89 billion) but was replaced in the third by the ESM, also wants to insure it will be repaid and will be watching.
In an interview with Spiegel Online, ESM chief Klaus Regling said, “Athens will remain closely linked to the ESM,” adding that with 204 billion euros ($231.96 billion) in rescue loans, “We are Greece’s biggest creditor. Given our long maturities and low interest rates, Greece saves around 12 billion euros ($13.64 billion) in debt servicing costs on its budget every year,” he said.
Regling said the crisis in Greece was sparked after it joined the Eurozone in 2001 and wages and salaries rose much faster than productivity.
“As a result, Greece’s economy lost competitiveness compared to other euro countries. In addition, there was a weak public administration with sluggish legal implementation, slow courts, and an underdeveloped land registry,” he said.
When it became clear in 2009 when then-PASOK Socialist leader George Papandreou – who had said, “The money is there,” was in post that Greece “had prettified its deficit figures, the country abruptly lost investors’ trust.”
He joined a chorus from the creditors in shooting down Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ constant claims there will be a “clean exit,” when the bailouts end even as the Greek leader is frantically trying to wiggle out from under more pension cuts set for Jan. 1, 2019 to which he agreed as his popularity keeps plummeting for reneging on anti-austerity vows.