FACE OF AN ECONOMY: Greece’s debt is not sustainable, warns IMF chief

Wages drop

Workers strike

A Journal of People report

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Christine Lagarde, the International Monetary Fund chief, has warned that Greece’s debt is not sustainable.  She said: Greece requires significant debt relief from Europe.

But, under pressure especially from Berlin, Greece’s 18 other euro partners have not yet broached the issue of debt relief, preferring to push that hot-button topic to next year.

Protesters in Greece took to the streets this week to criticize the government for going along with public sector cuts imposed by the IMF and the EU. Government spokesman Dimitris Tzanakopoulos accused the opposition of being behind a strike.

Greece is in its seventh years of austerity sought by international creditors in return for bailouts.

IMF and bailout payment

“We have all acknowledged (euro zone and IMF) that the third Greek (bailout) payment will be the last with the participation of the IMF,” Wolfgang Schaeuble told Ta Nea, a Greek daily, on Saturday.

The IMF, a key creditor in Greece’s bailout, will not participate in any further rescues of the debt-wracked country, Germany’s finance minister told the Greek newspaper.

The German finance chief has been inflexible on the issue of Greek debt relief, in opposition to the IMF which says it needs to be done to breathe new life into Greece’s floundering economy.

In the interview, Schaeuble pointed to the European Stability Mechanism (ESM), a bailout fund for euro zone countries, as a way to respond to the future needs of countries sharing the single currency.

Since 2010, the international bailouts accompanied by tough austerity measures “have obtained some results but have not resolved the problem,” said Schaeuble.

In another Greek newspaper, Klaus Regling, the ESM chief, appeared to share that view, saying there is “a discussion in Europe on reinforcing the monetary union.”

Speaking to the Efimerida ton syntakton (Journal of Editors), Regling said the euro zone had to become “less vulnerable” and that he was certain that “the ESM will play a very important role” if a new financial crisis arises.

Agreement was reached last month to pay the third tranche of Greece’s 86-billion euro ($97-billion) bailout, after being held up for months by a row over its need for debt relief which has pitted bailout-weary Germany against the IMF.

After participating in two previous international loans to save Greece from bankruptcy, the IMF is still set to take part in a third bailout.

For the moment, it has held back its contribution over the issue of whether the euro zone will decide to ease Greek debt — currently at 180 percent of gross domestic product (GDP).

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Wages Drop

Citing Eurostat figures a report by Philip Chrysopoulos from Greece said:

Greece is the only country in the EU where the gross minimum wage from 2012 to 2017 has dropped by 22%, while the rest of European see their wages go up. From 877 euros per month in the first half of 2012, according to the European statistical authority, minimum wage is now at 684 euros.

The July 2, 2017 dated report said:

“The citizens of Luxembourg enjoy the highest minimum wage in the European Union. In the first half of 2012 they were paid a minimum 1,801 euros per month and this year their minimum wage reached 1,999 euros.

“Even though extremely low, wages in Bulgaria had the highest growth percentage (70.4%) as minimum wage rose from 138 euros per month to 235 euros since 2012, even though they remain the lowest in the EU, despite the increase.

“Romania followed an increase of 70.1% (from 162 to 275 euros). However, even the countries that found themselves in bailout programs (Spain, Portugal, Ireland, Cyprus) did not suffer the catastrophic wage reductions that Greece did.

“In Ireland, for example, minimum wage rose by 6.9% to 1,563 euros (second place in Europe) from 1.462, while in Portugal there was an increase (14.8%) from 566 euros to 650 euros.”

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Job insecurity, strike, rubbish, rats, diseases

Another media report said:

Piles of rubbish have been mounting in cities across Greece for the past two weeks after thousands of refuse workers went on strike over job security. This led many Greek tourist destinations face a wave of “rats, diseases and rubbish”. Residents fear a “public health crisis”.

The dispute over the refuse workers has prompted chaos on streets.

These cuts mean that up to 10,000 workers in Greece who collect the rubbish could be out of a job as their temporary contracts end.

Earlier this week, protesters set fire to rubbish outside the interior ministry and threw paint at the building in a protest against austerity measures imposed by the country’s international creditors.

Riot police were called to stop protesters storming the building.

The risk of diseases has grown as the uncollected rubbish continues to rot in temperatures of up to 35C – which is expected to rise in the coming days.

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Authorities have since urged residents and businesses not to put out their rubbish.

The country’s health watchdog warned about a public health risk posed by the garbage rotting in the sun.

The report cited Maria Saranti, 62, a retired teacher: “It’s an absolute nightmare, like we don’t have enough problems. God knows what’s under all that, mice, snakes, it doesn’t bear thinking of.”

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