The public debt (Central Government Debt) amounted to €406.5 billion at the end of 2023 and is increased compared to the previous year by €6.2 billion, according to the latest Bulletin of the Public Debt Management Organization (in Greek-ΟΔΔΗΧ) . For this debt, the Greek State paid €6.5 billion in interest in 2023.
The Greek Government claims that the economy is growing at a fast pace, that the budget is in surplus (meaning the primary surplus but it is not a real (fiscal) surplus), that the debt is falling as a percentage of GDP, and that the Greek economy is amply funded by the Recovery Fund of the EU. Then, what is happening and the debt of Greece is constantly increasing? Are they not telling the truth and that as a state Greece survives only with loans?
Greece, in 2023, borrowed €9.5 billion from the money markets by issuing new bonds, €1.9 billion from reissuing bonds and €3.9 billion from the Recovery Fund.
In total, Greece borrowed €15.3 billion. At the same time, Greece paid €6 billion for government bonds that expired, €7 billion for repayment of loans of the Support Mechanism (Memoranda) and €895 million for other loans (Bank of Greece, European Investment Bank, etc.). In total, Greece paid €13.9 billion. The remaining €1.4 billion of the loan went to pay only part of the interest on the debt.
To the above amounts must be added the Treasury Bills (€12 billion) and the Repos (€54.5 billion) which are mainly recycled, but also increasing (Repos + €4.6 billion in 2023).
Conclusion: Every year Greece issues more debt than it repays in order to be able to pay in addition to debt repayments and interest. Thus, public debt increases.
Only if the budget is balanced, i.e. does not show a deficit after all the interest has been paid, then the debt will stop increasing, but not decreasing.
In order for it to begin to decrease, a fiscal surplus (not primary) is required, which is directed exclusively to the payment of debts, something practically impossible for the productively weak Greek economy. The debt has become perpetual.
When the Government refers to the debt, it shows that of the General Government (debt according to the limitations of Maastricht Treaty) which, at the end of 2023, is estimated at €356.6 billion.
This amount is obtained if the debt held by Greek State bodies (Insurance Funds, Hospitals, Municipalities, Universities, Organizations, Public Enterprises, etc.) is subtracted from the total debt of €406.5 billion. The cash reserves of these institutions are deposited in a special account of the Bank of Greece, are converted into Repos lasting a few days and are constantly recycled.
The difference between the debt of the Central Government and that of the General Government is €49.4 billion, i.e. most of the Repos (short-term loans) which are one of the categories of the total debt. Repos, however, must be repaid because otherwise all public bodies will go bankrupt and interest is paid for them (€1.6 billion in 2023).
The lower General Government debt is then compared to the rising and inflation-adjusted GDP and a debt-to-GDP ratio is arrived at. Calculating the GDP of 2023 at €218 billion in current prices (because the figures for the 4th quarter of 2023 have not yet been announced, the corresponding quarter of 2022 was included) the debt of the Central Administration amounts to 186% of the GDP and that of the General Government to 164% of GDP. The Greek Government of course prefers to present, the most favorable for it, second number.
The lower this ratio is, the less likely it is that there will be a default. The ratio of debt to GDP, rather as an indicator of the risk of bankruptcy of a country can be considered.
The new “memorandum loans”
In June 2018, Greece formally (not effectively) exited the memorandums by receiving a final loan of €15 billion. In total since 2010 he had received €290 billion. Subsequently, the necessary borrowing, to recycle the debt and cover the fiscal deficit, began to be done only by issuing bonds.
This did not last long because the covid-19 pandemic and the global economic and energy crisis came. The E.U. created various funds to keep the Eurosystem from collapsing. From these funds, Greece received up to last year €5.2 billion from SURE and €7.3 from the Recovery Fund.
Total €12.5 billion. These are loans, not free funding, as it is called, which are added to the public debt and on which interest is paid annually. Exactly what was happening with the memoranda loans. Within the Eurozone there is no free money, only borrowed money.
The dependency factor
The unconsidered debt of €406.5 billion is entirely in foreign currency, because it is in a currency that Greece cannot issue. Its servicing requires continuous borrowing either from the markets or from the EU funds. This need creates conditions of absolute dependence. In 2001, before Greece joined the Eurozone, 75% of the then debt was in drachmas and only 25% in foreign currency. Overnight all the drachma debt became euro-debt. But, the debt in drachmas was held by Greeks, it was under Greek law and the interest remained in Greece. The difference is that the debt in drachmas could also be serviced by issuing new money, while the debt in euros could only be serviced with loans.
The dependence on Euro-debt is not only economic, as many think, but extends to all government policies. Greece must behave as a good and obedient child in order for the markets to continue, the Commission, Berlin and the European Central Bank to lend to it.
All basic options in domestic politics, diplomacy, alliances, defense, maritime zones, productive investments, exploitation of natural resources, demographics, immigration, etc. they must have the consent of the country’s creditors. They are exclusively interested in limiting state spending on health, education, social welfare, national defense, and the privatization of strategic businesses and the country’s infrastructure so that there is money left over to service the debt. Since the bankruptcy of 2010 we have seen what happened and is still happening in Greece.
The holders of the debt, taking advantage of the country’s dependence, are simultaneously promoting their economic and geopolitical interests at the expense of the Greek ones with Turkey, with Ukraine, with the integration of the Western Balkans into the EU. etc.
This dependency must end, before it ends Hellenism. National sovereignty is the issue. The same was raised by Great Britain in the lead-up to Brexit.
PS1. For those who have doubts about the above, let us recall the public statement in 2018 of the later deceased, Honorary Greek Chief-of-Staff Commander M. Kostarakou: “In January 2009, the Hellenic Navy announced the order of six French Fremm frigates to replace an equal number of type frigates Elli (S–class). With the onset of the financial crisis the order was limited to 2 to 4 boats. Germany reacted to the agreement in October 2011 and therefore it was never signed.” For Germany, servicing the debt came first. The old 9 Helli-type frigates, aged 43-48 years, remain in service today in the Hellenic Navy.
PS2. Let us also recall that four days after the signing of the Prespa Agreement, June 2018, the Eurogroup, as a reward for Greece’s compliance with the interests of creditors, extended by 10 years the payment of installments for €96.6 of the total €141.8 billions of EFSF loans (2nd Memorandum).
