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Global Economy

"Historic Day for Greece"

Achielleas Oikonomou knows how it feels when you need the help of others: "I lost my job in 2014. That's when I found out about the soup kitchen 'O allos anthropos'. They helped me and I've been helping them ever since."

"O allos anthropos", in English "The other person", is a soup kitchen and table in one. It is run by volunteers like Oikonomou, who were often themselves affected by the consequences of the financial crisis – such as extremely high unemployment and massive cuts in pensions and social services. Aid organizations but also many volunteers tried to absorb what the Greek state was no longer able to do.

Inflation and energy prices are hitting the Greeks

Even if the situation has eased a bit in recent years, one in three people in Greece still lives on the brink of poverty. Especially now, with inflation at more than 11 percent and soaring energy prices, that means the queues at the soup kitchens are getting longer again.

"All the prices have gone up, but the pensions have stayed the same and we will have more problems in the winter," says Oikonomou. "New people are coming all the time. We see a new face every day. 200 to 250 portions of food are cooked here every day. But unfortunately that's not enough."

The retired couple Stella and Panagiotis also come here regularly: "Nothing has stayed the same. At the vegetable markets and in the supermarkets, prices have changed everywhere. The word 'save' has always been of great importance and now even more so."

Greece was on the verge of bankruptcy

Many Greeks have been familiar with saving and managing shortages since the financial crisis at the latest. In October 2009, the Greek government admitted that the budget deficit was in fact four times higher than previously reported. The country was on the brink of bankruptcy.

Other EU countries and the International Monetary Fund granted Greece the first aid loans. At that time there was no European rescue package or crisis fund to lend money to struggling EU countries. In 2010, the first euro bailout fund with the unwieldy name "European Financial Stability Facility" was created, from which the European Stability Mechanism, or ESM for short, emerged two years later.

"Then the Commission wanted to take a closer look"

Overall, Greece has taken out almost 290 billion euros in loans. But in order to get the money, the Greek state had to commit to strict austerity measures. And: Since 2018, after the official end of the third and last rescue program, Greece has been under increased surveillance by the EU.

"Then the Commission wanted to take a closer look," says economist Jens Bastian. He has lived in Greece for almost 25 years and was a member of the European Commission's "Task Force for Greece". He is currently on a research stay at the Science and Politics Foundation in Berlin. "The EU Commission wanted to ensure that Greece also adheres to conditions after the end of a program, but that Greece can also make it clear: We have drawn our conclusions from past experiences. We now want to be a reliable partner."

Unemployment falls from 30 to 13 percent

So things are looking up again in Greece: last year the economy grew by more than eight percent, and this year it should still be 3.5 percent. The unemployment rate has also fallen from almost 30 percent at times to 13 percent. The reform efforts are having an effect – this has also been noted throughout the EU.

"On August 20, the country will leave the EU's increased surveillance," Greek Finance Minister Christos Staikouras said on Greek television. "What does that mean? Along with the early repayment of all International Monetary Fund loans and the full lifting of capital restrictions, the country is returning to European normalcy." And Prime Minister Kyriakos Mitsotakis said: August 20, 2022 is a "historic day for Greece and all Greeks".

Greece pays off loans earlier than planned

Greece had already repaid the last outstanding loans from the International Monetary Fund in the amount of almost 1.9 billion euros in April – two years earlier than planned. However, because the country owes most of its debt to other European countries and the European Stability Mechanism, the national debt remains high and, according to estimates, will still account for almost 190 percent of gross domestic product by the end of the year.

Nevertheless, the fact that Greece is now leaving the EU's enhanced surveillance framework is good news, says economics expert Bastian:

The end of the increased surveillance will increase the country's financial room for maneuver again, but above all it is a positive signal to the financial markets and foreign investors – at least that's what the Greek government hopes. For many Greeks, however, nothing will change in their everyday life for the time being.

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