Austerity Drives Down Greek Deficit

BOGAusterity measures that squeeze Greek pocketbooks are making an impact. Greece cut its deficit by a third last year, to 6.5 percent from 9.4 percent in 2011.

The government expects to cut the deficit to 4.3 percent by the end of this year, and predicts the beginning of a recovery as it moves toward the Eurozone ceiling of 3 percent, although its debt is still expected to be around 124 percent of GDP in 2020.

Prime Minister Antonis Samaras’ coalition government pushed a 13.5 billion euros ($17.8 billion) spending cut and tax hike plan through parliament in December that unblocked a series of 52.5 billion euros in loans, which stopped market jitters.

“It’s fast (deficitD reduction, good news in a way because it means the program is proceeding, but with a deeper recession at the same time,” Platon Tinios, Assistant Professor of Economics at the Piraeus University, told Southeast European Times.

However, he said the government must find ways to raise revenues, and not rely on spending cuts alone. “As you cut, you make cuts harder. Now we’re getting into the problem’s kernel and some painful choices will have to be made,” he added.

The cuts, which started in 2009, targeted workers, pensioners and the poor while tax evaders who owe 52.5 billion euros $69.2 billion) have still largely been ignored. Greek workers responded with a barrage of protests and strikes.

“Desperate people are more likely to engage in desperate actions,” Dimitris Hatzinikolaou, economics professor at the Ioannina University, told SETimes. “For a highly indebted country … a policy of such a big deficit reduction leads undoubtedly to catastrophic phenomena, such as 30 percent unemployment,” he added. The rate is now at a record 26.8 percent.

Despite the increase in Value Added Tax (VAT) to 23 percent, lacking tax revenues and a 775 million euro ($1.02 billion) downturn as Greeks have slowed spending almost to a standstill, are complicating rebound hopes.

Vassilis Monastiriotis, lecturer at the London School of Economics, told SETimes that overall, “the numbers are good and close to the best hoped for.” He added: “There’s a big worry whether the government will be able to collect the taxes and discontent is great on the streets … (but) the measures taken have been progressive.”

Antonis Klapsis, head of research at the Konstandinos Karamanlis Institute for Democracy in Athens, told SETimes that, “news about the deficit is good, but the key is whether Greece will find its way back to economic growth. If this doesn’t happen and the depression continues, then the situation could easily get out of hand.”

(Reprinted by permission of Southeast European Times,


  1. MORE “PROGANDA” FROM THE EU COMMISSION CRIMINALS & PASOK & ND whos are selling the country and its People out… Soon Citizens will REVOLT and jail all those traitors involved and take back Greece.

  2. The Greek government is actually successfully bringing spending under control and instead of applauding the sacrifices haven’t been for naught — you are whining about it?.

    As everyone can tell here you are a regular Greek patriot. We can all especially tell when you referenced the Skopians as “Macedonians” and never bother to criticize your Skopians pals trolling this website trash talking Greece.

  3. Far leftists crying everywhere at the remarkable job our coalition government under guidance of Samaras to reduce account deficits in such a short span of time.  Our leftist comrades want their own government to fail.

  4.  I used to post under handle worldarts but now post Under handle Paul Johnston PhD.

    I thought it was time to change handles because posters started to point out that I was actively arguing in support of terrorism against a democratically elected Greek government.

  5.  Lol, a Greek patriot? When you give up your US citizenship, move to Greece and become a Greek citizen, when you share the burden on everyone here, pay your taxes and above all do your national service with all the other Greek youth then you are entitled call yourself a patriot, Alex. Until you do that, you have absolutely no right to hypocritically question anyone elses patriotism. 

  6. Wow I am sooo impressed! The government is only leaving outside of its means by 6% That means that the debt is only going up by 6% of GDP each year. Hmm maybe if we stop breathing air and sell it all to Qatar, we might even get that down to say 4% growth in our debt each year.

  7. And before anybody says Obama is running a 9% deficit, consider that the USA has its own currency and can devalue the debt, Greece doesn’t. It would be sensible for us to leave the Euro – but that would be another national failure.

  8.  Hey dude.  Still using me handle? I thought you claimed to be “German”. Are you Greek today?

  9.  Hey dude.  Still using my handle? I thought you claimed to be “German”. Are you Greek today?

  10.   Hey dude.  Still using my handle? I thought you claimed to be “German”. Are you Greek today?

  11. I have to question if you are Greek much less a patriot Choralife. We have yet to see a single post of yours denoucing the Skopians.


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