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Economy

Bailouts Failed to Slow Greece’ Still-Soaring Debt, Jumps During Pandemic

February 18, 2021

ATHENS – Three international bailouts of 326 billion euros ($393.47 billion) over an eight-year period that ended on Aug. 20, 2018 did nothing to keep Greece’s debt from skyrocketing by the second, especially in 2020 when the COVID-19 pandemic struck.

Greece recorded the third highest increase in sovereign debt in terms of Gross Domestic Product (GDP) in the world last year, a problem that was universal but worse for Greece, said a survey by the  Institute of International Finance (IIF) reported Kathimerini.

But at the same time a rise in corporate arrears and household payments fell because the New Democracy government pumped 17.5 billion euros ($21.12 billion) into subsidies for workers laid off during two lockdowns and to keep their companies afloat in the interim.

Debt worldwide ballooned $24 trillion to a record $281.5 trillion, more than 355 percent of GDP, much worse than that during the financial crisis of 2008 and 2009, the IIF noted.

As for Greece, the institute said household debt rose about 2 percent while for corporations and businesses it was almost 10 percent, most due to state borrowing which saw the ratio of debt-to-GDP jump almost 50 percent.

Greece was behind only France and Spain, said the survey, which indicated that it will get worse in 2021 with debt rising although there are hopes of modest growth by years end thanks to vaccination programs that could slow the lingering pandemic. 

It will take Greece decades to repay the loans to the Troika of the European Union-European Stability Mechanism-European Central Bank (EU-ESM-ECB) although it is paying off debt to the Washington-based International Monetary Fund (IMF) early even during the Coronavirus crisis that has seen state coffers being depleted with closed businesses not paying taxes.

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ATHENS - After saying a Value Added Tax (VAT) on food as high as 24 percent couldn’t be reduced because it was unaffordable, the New Democracy government has given a cut from that rate to 13 percent for taxis.

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