Greece Going Through 'Great Depression'
Athens must reduce its budget deficit below 3 percent of GDP by the end of 2014, from 9.3 percent of GDP in 2011 -- requiring almost another €12 billion in cuts and higher taxes on top of the €17 billion successive governments have cut from the budget shortfall.
The left-right coalition of conservative Prime Minister Antonis Samaras is under intense public pressure to ease the burden on Greeks. Samaras said on Sunday that Greece was in a "Great Depression" similar to the one in the U.S. in the 1930s.
Athens has conceded it had slipped "in some respects" in implementing the cuts and reforms required by its creditors. Finance Minister Yannis Stournaras made the admission following a meeting with senior officials from the so-called "troika," made up of the European Commission, the European Central Bank and the IMF, which has been checking the country's accounts this month.
Greece argues that its reform efforts were slowed by the two national elections in May and June and wants its lenders to give it two more years to achieve the budget goals to avoid an even deeper economic slump. Its lenders have opposed the idea because it would require even more financial aid.
'Greece Must Catch Up'
Spiegel has learned that the troika expects that granting Greece more time would require additional aid of between €10 billion and €50 billion. The troika's report on Greece's reform progress could determine whether the country gets its next installment of €31.5 billion in aid under the second aid package. If it doesn't get the installment, Greece risks running out of cash within weeks.
German Finance Minister Wolfgang Schäuble made guarded comments about Greece on Monday. Asked if the country would have to leave the euro if the troika inspectors filed a negative report on its reform progress, Schäuble told German newspaper Bild: "I won't pre-empt the troika. If there have been delays, Greece must catch up. When the troika submits its report, the Euro Group (of euro-zone finance ministers) will discuss it."
Even if the next tranche of aid weren't paid out and the Greek government were forced to declare bankruptcy this autumn, it is unclear what would happen. E.U. treaties don't give the bloc the power to evict a country from the single currency union.
Intellpuke: You can read this Spiegel article, with reporting by various news agencies, in context here: www.spiegel.de/international/europe/germany-and-imf-to-refuse-greece-further-financial-aid-reports-say-a-845860.html