Greece’s austerity program has been described as the toughest one of its kind in post-World War II Europe. After five years of austerity, Greece was scheduled to exit its bailout at the end of Dec. 2014, and return to the international market, but it’s been unable to. CCTV’s Filio Kontrafouri reported this story from Athens.
Greece continues to struggle with painful austerity programkGreece's austerity program has been described as the toughest one of its kind in post-World War II Europe. After five years of austerity, Greece was scheduled to exit its bailout at the end of Dec. 2014, and return to the international market, but it's been unable to. CCTV's Filio Kontrafouri reported this story from Athens.
Greece’s bailout has been so huge and painful, and perhaps no democratic country could sustain such program without shocks. The bailout gave rise to the once marginal, leftist Syriza opposition, which won the European Parliament election in May. The pressure on the government became tremendous as it plunged in opinion polls due to its unpopular policies.
“At that time, there was a huge mistake made by the prime minister, who decided to more or less adopt the line of the opposition party and say that this is the end with our adjustment program, we will go to international markets, we do not need the existing economic policies of the E.U. and our partners, and there he missed the boat,” Loukas Tsoukalis, president of of the Hellenic Foundation for European and Foreign Policy said.
Greece’s creditors saw that the government was focusing more on politics than enforcing the program. A possible power change stalled talks between the two parties. The prime minister brought the presidential vote forward to end political instability, which triggered a snap election. Even so, the presidential vote had already determined the course of the economy and the bailout.
“For these reasons, the political instability, the lack of state revenue, in the 4th quarter, though we don’t have the official numbers yet, I think the economy will not have the same dynamic as before,” financial journalist Sotiris Nikas said. “The government saw this but they couldn’t do much. The fact that there was the milestone for the presidential election to be held in February at the latest, had practically put a freeze on everything.”
The budgetary consolidation that Greece has been asked to enforce to save its economy has been difficult to do politically. Governing parties have paid a heavy price for imposing a fiscal program that has been far from perfect.
Greece’s creditors have admitted that there have been missteps in the country’s rescue program. The International Monetary Fund said that one of the biggest problems has been excessive optimism about growth. Most experts have said that Greece’s rescue program was unbalanced and its fiscal targets have been set too high.
“After 6 years of recession and 5 years of austerity, to present in 2015 a primary surplus of six to seven billion, is something that must change,” Nikas said. “This cannot continue. Greece has already taken fiscal measures worth about 70 billion [euros] in the last four years, every household is dry from cash and there is no possibility to enforce such strong austerity.”