Since 2010, Greece has been living the tragic myth of Sisyphus, the king in Greek mythology who tried to outsmart the Gods and was punished for his trickery by being forced to eternally roll a huge stone up a hill, only to watch it roll back down every time he would approach the top.
The martyrdom of Sisyphus is all the more tragic because, although he is conscious of his plight, he continues to believe that he will achieve success on his next attempt, only to experience the pain of defeat over and over again.
This is exactly what has transpired in Greece throughout its never-ending debt crisis. For, every one of Greece’s four different administrations since 2010 believed that it could free the country from the constraints of the so-called loan “memoranda,” only to be forced to return to the clutches of its lenders more tightly shackled each and every time.
Let us look back to the beginning of the bailouts in order to fully comprehend the situation. In mid-2010, the debt-laden country enlisted the help of the “troika,” the International Monetary Fund, the European Commission and the European Central Bank, which formulated a joint aid mechanism for Greece. The funding from the support program was provided under the condition that Greece implement various fiscal adjustment measures and, in particular, that it would undertake concrete fiscal consolidation.
Regardless, the Greek economy was never able to attain these targets, continuing to operate in a state of financial imbalance. As such, in June of the following year, the government was forced to adopt a medium-term program that included savagely harsh austerity measures and salary cuts.
A second memorandum, replete with further urgent provisions for public debt reduction and steps to rescue the national economy, was passed on February 13, 2012 while subsequent lengthy negotiations with the troika led to further hardship with the adoption of a medium-term framework for fiscal strategy in November of 2012.
Finally, at long last, in January of 2014, the country produced a primary budget surplus and there was optimism for the future. In the spring of 2014, Greece was able to return to the financial markets and borrow money at respectable interest rates, prompting Prime Minister Antonis Samaras to proudly proclaim that, by year’s end, the nation would be able to exit the hated memoranda.
Surprisingly, however, seeing tepid support for his country’s efforts by its European counterparts, Samaras would proceed to call a snap Parliamentary Presidential election that would in turn lead to national elections that would bring the radical leftist Syriza party to power. In the meantime, given the unsettling uncertainty, the country’s banks would see their cash stockpiles slowly but surely depleted, mimicking the effects of an informal bank-run.
The elections were determined to be the key factor that caused a shortfall of some 2 billion euros in state revenues in the 2014 budget, as was admitted by Greece’s new Deputy Finance Minister, Dimitris Sotiropoulos. Adding this amount to the 11 billion euros required by Greece by June, 2015 in order to meet its various obligations such as loan payments, salaries, pensions and purchases, it is evident that the funding gap is far beyond the capacity of the current Greek economy.
Also, from the beginning of March until the end of April, the country has external commitments totalling some 9 billion euros, 1,7 billion due to the IMF and 7 billion to cover maturing T-bills. On top of which, the finance ministry must deal with the cash deficit caused by the aforementioned gap in tax collections.
Internally, March is already predicted to be a difficult month fiscally as revenues will barely reach 3.2 billion euros compared to the 5.2 billion in projected expenses. A deficit is also predicted for April as the country expects to collect 3.5 billion euros while it must spend 4.32 billion. Thus, over the next two months, the operating deficit will climb to between 4 and 4.5 billion euros, an unsustainable situation given the circumstances.
Sadly, Greece, a country that was primed to emerge from its rigid bailout regime, looks destined to suffer the cruelty of a third memorandum which is expected to be agreed upon with its European partners in four months. Even sadder is that the interim agreement the new Syriza-ANEL government recently signed with the Eurogroup clearly dictates that no money will flow to Greece until the country meets all its prior obligations and continues to show a primary budget surplus. Conversely, as seen, a sharply rising deficit is being registered, month by month.
The Greek people, with their heroic sacrifices, managed to move the boulder of Sisyphus to the top of the mountain, only to have it fall back again. And the torment of the country, like the tragic Greek hero, drags on and on, without any light or hope on the horizon.