Monday, 06 July 2015 20:46

The Greek debt structure a quick glance?

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Well within a little bit more than a week, the Greek referendum was announced on 26 of June and held on 5 of July 2015, the small southern economy (Greek GDP amounts to less than 2% of Euro Area GDP) and its long lasted debt crisis set the whole EU project into unchartered waters – the ever more growing possibility of EU member leaving the block. Currently the biggest single creditor of Greece is the European Financial and Stability Facility (EFSF).

“The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The EFSF has provided financial assistance to Ireland, Portugal and Greece. The assistance was financed by the EFSF through the issuance of bonds and other debt instruments on capital markets.

A permanent rescue mechanism, the European Stability Mechanism (ESM) started its operations on 8 October 2012. The ESM is currently the sole mechanism for responding to new requests for financial assistance by euro area Member States.” (source: http://www.efsf.europa.eu/about/index.htm)

The EFSF programme started on 21 February 2012. It was originally due to end on 31 December 2014, but was extended twice upon request of the Greek government. In the context of the programme, the EFSF disbursed €141.8 billion to Greece. It included €48.2 billion to cover the costs of bank resolution and recapitalisation. Of this amount, €10.9 billion in EFSF notes was not needed and was later returned to the EFSF. Accordingly, the outstanding loan amount stands at €130.9 billion. This makes the EFSF Greece’s largest creditor by far. (source: http://www.esm.europa.eu/press/releases/efsf-programme-for-greece-expires-today.htm)

Today Greece’s debt amounts to 320 bn €, which stands for Debt to GDP ratio of 177% as the country’s unemployment rate stands at the staggering 26 % of the working population. Then the country’s leading creditors are chartered as follows:

Chart
Source: http://www.bbc.com/news/world-europe-32332221

Kind regards, Rosti

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