The nation of Greece will be able to finance itself through international money markets again, having completed the EU/IMF bailout process. Greece needed to turn to its EU partners and the IMF for financial support when the costs of borrowing money in the international market became prohibitive in the aftermath of the Global Financial Crisis and the revelation that it had fudged the accounting over the convergence criteria for joining the Euro in the initial wave of nations.
Greece needed three international bailouts totalling €289 billion and it has just completed the third package, worth €61.9 billion. The final loan was purely an EU affair since the IMF believed that Greece needed to be offered a debt haircut to make the process sustainable – a politically impossible condition for major Eurozone donors. The deals were conditional on a range of reforms to the Greek economy that the donors believed would put the nation on a track to sustainable growth – naturally, they were hugely unpopular in Greece since it involved significant public austerity and reduction of some pension incomes.
The Greek economy has shrunk by 25% since the crisis broke (some of this was inevitable as a consequence of the Global Financial crisis, of course). However, the IMF suggests that only four nations (Yemen, Libya, Equatorial Guinea and Venezuela) has seen a worse economic contraction in the last ten years.
Greece still has major problems to overcome, not least of which is the highest unemployment level in the Eurozone. Unemployment stands at 19.5% officially, down from a high of 27.9% (July 2013) with youth (<25 years of age) a particular problem. Inflation in Greece is not a problem, however since many Greeks are having to be very careful with their spending, forcing retailers to keep prices down as far as possible. Inflation in Greece is running at 0.9% currently.
As a result of the crisis, Greek debt stands at almost 180% of GDP (three times the level permitted under EU convergence criteria). Repayment of the debt to its EU and IMF creditors is likely to take until 2060 and attracts an interest charge of 2.2%. The deal it struck with the EU on this means that Greece must maintain a tight control over public spending and is required to run a budget surplus.