Greece gets 110 billion euros, biggest bailout in history
Greece got 110 billion euros from the euro zone countries and
from the International Monetary Fund yesterday, the biggest
financial aid for a country ever. In exchange for this money, which
accounts for about half of the country's GDP (240 billion euros in
2009), the authorities in Athens pledged to adopt really harsh
austerity measures. Greece promises budget spending cuts by up to
10% of the Gross Domestic Product (GDP), up to 30 billion euros in
state budget savings until 2012, dropping the 13th and 14th
salaries Greeks get for holidays and tax hikes, such as VAT, which
should go up from 21% to 23%.
It remains to be seen, however, if the Greek state is able to keep
its word and enforce the austerity measures it committed to. "The
measures are very hard to stick to, considering Greece's past
experience and the social opposition, which is high in this
country, but the Greeks have no other option," said Ionut Dumitru,
Raiffeisen Bank's chief economist.
The euro zone countries have always been regarded as examples of
rigorousness and fiscal discipline, an essential pre-requirement to
join the economic and monetary union. The irony of it all is that
the weak links of the euro zone have to follow in Latvia's
footsteps, one of the worst affected countries by the world crisis,
which is not a euro zone member. The government of that Baltic
state cut public sector employees wages' by 25% and laid off 20% of
the people working in the sector.
Economics professor Daniel Daianu said the financial aid package
given to Greece was not theoretically a bailout and could be
regarded as help for European banking groups exposed to the
country's economy.