Greece emerges from eurozone bailout programme

“Greece has successfully completed a three-year eurozone bailout programme worth €61.9bn (£55bn; $70.8bn) designed to tackle its debt crisis.

After the biggest bailout in global financial history, totalling more than €260bn, the country will be paying loans off for several decades.

But for the first time in eight years, it can borrow at market rates.

As a condition of the loans, the government was forced to introduce deeply unpopular austerity measures.

The economy has grown slowly in recent years and is still 25% smaller than when the crisis began.

The €61.9bn was provided by the European Stability Mechanism (ESM) in support of the Greek government’s efforts to reform the economy and recapitalise banks.

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How did the bailout unfold?

It began in 2010, when eurozone states and the International Monetary Fund (IMF) came together to provide a first tranche of €20bn.

The European single currency had fallen to its lowest level against the dollar since 2006 and there were fears the debt crisis in Greece would undermine Europe’s recovery from the 2008 global financial crisis.

At the worst moments of the crisis, there were doubts about whether the eurozone would survive at all. There seemed to be a real possibility that Greece and perhaps others might have to give up the euro.

The response included bailout loans, for a total of five countries, and a promise from the European Central Bank that it would, if necessary, buy the government debts of countries in danger of being forced out of the eurozone.

Set up by eurozone states, the ESM had been prepared to provide a further $27bn to Greece but said the country had not needed to call on it.

“Greece can stand on its own feet,” said ESM chairman Mario Centeno.

He thanked the Greek people for their co-operation.

Has the pressure eased off?

Greece’s freedom to manage its own economic affairs will be tempered by enhanced surveillance from the European Union’s executive, the European Commission.

This is designed to ensure Athens does not backtrack on reforms agreed with its lenders.

Professor Costas Meghir, an economist with Yale University based in the Greek capital Athens, warned that the end of the bailout programme did not mean the Greek economy’s problems had been solved.

“It’s of course a very important milestone, both psychologically and in practice but it doesn’t mean that the problems are over,” he told the BBC.

“It doesn’t mean that austerity is over either. In some sense, the Greek government has to be even more disciplined now, because it has to rely on foreign markets at reasonable interest rates to be able to borrow.

“Austerity can only end once pro-growth policies are put in place that would allow flourishing of investing, for direct investment and of business more generally and this hasn’t really happened to a sufficient extent yet.”

How have Greeks weathered the crisis?

At the height of the crisis, unemployment soared to 28% but today it is 19.5%.

Those employed often have jobs for which they are overqualified, such as chemistry graduate Panagiota Kalliakmani, 34.

Seeing career prospects in her home city of Thessaloniki shattered, she is now finding work as a chef.

“The crisis was a slap in the face,” she told AFP news agency. “We had grown up accustomed to the benefits of living in a European country and suddenly everything came crashing down.”

“Nothing is certain,” she added. “The crisis taught us not to make long-term plans.”

Some 300,000 Greeks have emigrated in search of work since the crisis began while those depending on state benefits have seen their income whittled away.

Yorgos Vagelakos, an 81-year-old retired factory worker, took home a pension and benefits amounting to €1,250 before the debt crisis.

Today he gets €685 and his debts are growing, he told Reuters news agency. He can no longer support the families of his two sons and can barely cover his and his wife’s needs.

“I wake up in the morning to a nightmare,” he said. “How will I manage my finances and my responsibilities? This is what I wake up to every morning.”

What does the Greek milestone mean for Europe?

Professor Kevin Featherstone, director of the Hellenic Observatory at the London School of Economics, said Greece had helped to safeguard the future of the eurozone by agreeing to the terms of the bailout programme.

“By enduring this period of austerity we have avoided a Grexit [Greek exit from the European Union].

“For a political system to have gone through these years of austerity, this depth of economic hardship, and maintained a functioning society, a functioning democracy, is testament to the robustness of Greece as a modern state. Greece has saved the euro.””

Source – BBC News