As Greece officially emerged from an eight-year-long bailout programme on Monday few see reasons to celebrate, with one in five Greeks unemployed, incomes down by a third and taxes skyrocketing.
The European Union, the European Central Bank and the International Monetary Fund loaned debt-wracked Greece a total of €289 billion in three tranches in 2010, 2012 and 2015.
But the economic reforms the creditors demanded in return brought on an economic collapse comparable to the Great Depression, with a quarter of GDP evaporating over eight years and unemployment soaring to a high of 28 percent.
For all the official pronouncements that Greece’s eight-year crisis is now over, few Greeks see cause for celebration.
The economy is once again growing modestly, state finances are improving, exports are up and unemployment is falling. But one in five Greeks is still unemployed, average income has dropped by more than a third and taxes have skyrocketed.
Moreover, clinical depression is on the rise as are suicides, and hundreds of thousands of skilled workers have left to seek out their fortunes abroad.
After the official end of the bailout on Monday, Greece will get no new loans and will not be asked for new reforms. But the government has agreed to a timetable of savings so strict as to plague a future generation and a half: For every year over the next four decades, governments must make more than they spend while ensuring that the economy – which has shrunk by a quarter since 2009 – also expands.
“Personally, I can see no hope for me in the coming years,” says Paraskevi Kolliabi, 62, who lives on a widow’s pension and helps out in her son’s central Athens silver workshop. “Everything looks black to me.”
“My pension has been cut about 30 percent since the start of the crisis,” Kolliabi continued. “I have never in my life gone through such [financial] hardship as during the past two years.”
Greece’s middle class, whose rapid growth once fuelled the economy, has been squeezed hard by rising taxation, mortgages left over from the bygone days of easy credit and job losses.
Greeks “still very much feel the burden of taxation”, with business paying up to 85 percent of their income in taxes or social security contributions, said FRANCE 24’s Nathalie Savaricas, reporting from Athens.
But tax collection remains uneven in a country where compliance was never strong, and the increasingly extravagant demands coupled with often irregular policing have only deepened a sense of injustice.
“What I see is that the rich are becoming richer and the poor poorer,” Kolliabi said. “We used to cater to the middle class, and the middle class is dead – they can’t make ends meet.”
Following one of the latest rounds of cutbacks, her son, Panagiotis, now sees more than 60 percent of his income gobbled up by taxes, pension and social security contributions. That kills any hopes for expanding his business.
“The prospects for after August 20 are not good,” he said. “There’s no way I will be able to make an investment … to expand my business.”
In the northern city of Thessaloniki, Christos Marmarinos, 55, had to close his clothes manufacturing unit after 25 years due to lack of customers. Instead, he plunged what funds he had into something altogether different, opening a cafeteria and grocery store.
“We found this way out, and employ 10 people,” he said. But Greece needs more than cafeterias if the economy is to pick up again and modernise, he says. “We need real investments in manufacturing.”
Some of the troubles for Greece’s private sector are due to disastrous government attempts in the early months of the crisis to shield the bloated public sector from cutbacks. Traditionally, the public sector has been a key source of votes for any ruling party.
But while considerably smaller and poorer than before the crisis, it remains largely ineffective and disgruntled, providing ever shoddier public services.
The one area of the economy that’s undoubtedly flourishing is tourism, contributing some 20 percent of GDP, with officials projecting a record-high 32 million visitors this year. Greeks, however, are finding it increasingly expensive to go on holiday in their own country while a boom in short-term rentals in residential Athens has driven up rents beyond the reach of many locals.
Even the governing coalition, which swept to power in 2015 promising to instantly end austerity and cancel Greece’s debt – only to reverse course and sign a new tough bailout programme – is circumspect about the end of the bailout.
“We’re not planning any parties,” said Costas Zahariadis, an official in the dominant left-wing Syriza party. “We don’t believe we should start celebrating as if a large section of Greek society didn’t have serious financial problems. But of course, we won’t be shedding tears over Greece leaving the bailout era.”
All told, Greece now owes total debt of €322 billion, or more than 180 percent of annual economic output. Of that, €256.6 billion is owed to eurozone creditors and €32.1 billion to the International Monetary Fund.
Greece will remain subject to quarterly visits by technical experts to make sure it is meeting agreed targets for public finances until the last bailout loan is repaid in 2060.
Some experts say that the best way to help Greece would be for eurozone countries to write off a part of the loans altogether. But several EU governments have balked at that; the bailouts were unpopular, particularly in Germany, and loan forgiveness would be a tough sell for leaders such as German Chancellor Angela Merkel.
The IMF and prominent economists say that if at least part of Greece’s loans are not written off, its debt burden will eventually spin out of control again.Turkey crisis may have rocked markets but investors are still ‘buying the dip’ in emerging economies