Is Greece on Track to Meet Its Creditors’ Goals?
Tension mounts over whether further austerity measures will be needed in Greece as the latest data brings no cause for celebration to the Mediterranean country, Reuters reports.
Official data from the Greek government brought two more pieces of bad news for the country. The unemployment rate climbed to 27.6 percent in July, a 0.1 percent increase from the previous month, while industrial output dropped 7.2 percent in the month of August. The jobless rate in Greece has shown no signs of relenting, while the country’s industrial sector is already operating at far below pre-crisis levels.
The government also projected that its primary surplus for 2013 would amount to 0.2 percent of GDP. What this means is that, if Greece were allowed to make no debt repayments this year, their budget would put them in the black. However, this is more of a theoretical measure than a practical one. Debt is set to reach over 175 percent of GDP this year in Greece.
Achieving a primary surplus is important for other reasons as well. The threshold allows Greece to unlock a new round of funding from international creditors, including the International Monetary Fund and the European Central Bank. Talks between Greek officials and the so-called “troika” of lenders held just days ago revealed that there are still deep impasses between the two parties.
While the IMF has stated that further cost-cutting measures will be needed, Greek officials have stood firm in holding that no more austerity measures will be implemented. The widely unpopular measures — including thousands of layoffs in the public sector — have already led to strikes by groups such as teachers and doctors.
The IMF points to two key measures of progress that it does not think that the Greek government will be able to meet. One goal is to corral the public debt, hoping to get the figure under the 110 percent mark (of GDP) by 2022. With debt levels only soaring higher, and the Greek government pushing for further debt restructuring to defer repayment into the far future, it seems unlikely that this goal will be met.
In addition, the terms of past loans dictate that Greece’s primary surplus should reach the 1.5 percent mark of GDP next year, while many analysts think that it will come in at only around 1.1 percent of GDP.
The situation is tense all around with lenders such as Germany beginning to fear that they will see far less return on their bailout money than initially promised, and the Greek people continuing to suffer during tough economic times. The crisis has hit especially hard on young people, with youth unemployment remaining well above 50 percent in the country.