Rus News Journal

Greece has got to the closed debt circle

the Greek republic endures now the deepest economic crisis for last decade. The volume of a state debt of Athenes has reached following the results of last year almost 300 mlrd euro, and the budgeted deficit has grown to record 12,7 %. Thus from - for the errors the country has got to a vicious circle which cannot break off.
the matter is that for payment of public debts of Greece it is necessary to enter the market of loans again. And their cost for Athenes is record-breaking high - an order 6 - 6,5 %. As a result, paying off with old debts, Greece gets in new, and experts consider that without the aid of the European Union to this South European country not to manage, transfers Reuters.
the Big deceit of the Greek authorities
In October of last year to the power in Greece the new government which has begun to expose the predecessors has come and has reconsidered all state statistics. It has appeared that throughout long time the cabinet led by Kostasom Karamanlisom deliberately underestimated the basic statistics.
instead of designated before a budgeted deficit in 3,7 % from gross national product there was a menacing figure - 12,7 %, and the size of a cumulative state debt of the country has been estimated at level almost 300 mlrd euro, or 110 % from gross national product. Disclosing of these indicators by government Georgiosa Papandreu has led to sharp falling of an euro exchange rate and even has generated hearings about an exit of Greece from an euro zone. In turn the markets have punished prodigal and dishonest Greeks sharp increase of cost of loans.
the default will not be
Literally today the head of the Greek government G.Papandreu has underlined that Greece cannot reduce a budgeted deficit to level below 3 % to 2012., if cost of loans for the country remains at level 6 - 6,5 %. In turn a number of the interrogated participants of the market at all do not exclude the announcement Greece of a default and an exit of this country from a zone of the reference of uniform European currency.
However, it is necessary to recognise that so gloomy forecasts cannot come true, most likely. Even if level of loans for Greece remains at level 6 - 6,5 % (namely under such rate one month ago the country has let out state bonds), it will not be accident. this indicator means only superfluous 500 million euro a year that is comparable to cost of one beautiful submarine. It is obvious that it not that sum, from - for which Athenes can declare a default - leading economist EFG Eurobank and professor University of Piraeus Gikas Harduvelis sneers.
to Occupy to pay off on debts
Following the results of last year a total debt of Greece has made 272 mlrd euro, and this year the country plans to occupy 53 billion more The paradox consists that the most part of loans will go just on service of already existing debt: only in April - May Athenes should pay off on debts for the sum nearby 20 mlrd euro. now the authorities occupy approximately under 6,5 % annual. By our estimations, the average interest rate on the remained debts of the country will grow from 4,3 % in 2009. To 5,5 % in 2013. - expert Capital Economics of Ben Mej speaks.
Thus, annual service of the Greek state debt at a rate of 300 mlrd the euro will manage to the country in 16,5 mlrd euro annually. Unpleasantly, but it is not critical for the country, the annual which volume of gross national product makes nearby 240 mlrd euro. In the beginning 90 - h years of the last century cost of loans for Athenes was much more above, but the country has managed to endure this uneasy period, participants of the market add.
Without European Union intervention not to manage
However the basic risk for the country now consists not in high interest rates, and that the operating government of Greece can not fulfil the promises on reduction of budgetary deficiency or that taken measures will provoke sharp deterioration of economic indicators. Both in that and in other case nervousness of investors concerning Greece will increase that will lead to the further growth of cost of loans.
for this reason, experts consider, Athenes will not manage to do without the help of the European Union. If in the near future the EU countries do not develop the concrete program of the help to this South European country, Greece cannot get out of a vicious circle: to take a new debt, to give the old.
social instability in the Greek republic adds fuel to the fire also. The measures sounded by the authorities on reduction of a budgeted deficit and so have led to national excitements, and now at Papandreu and its governments remains not so a lot of time to convince citizens of the country of efficiency of undertaken actions. it is impossible to accept strict measures for reduction of budgetary deficiency, to cut down salaries and pensions, finally to receive higher interest rates - economist Alpha Bank of Mikael Masurakis speaks.
other participants of the market adhere to the Similar point of view also. As they said, the help of the European Union is simply necessary now for Greece to return confidence on the markets. how to get out of this vicious circle? - economist EFG Eurobank Platon Monokrussos asks a question. First of all it is necessary to calm the markets, and then to stabilise interest rates, having achieved budgeted deficit reduction - the expert underlines.