by George Atsalakis
and Ioanna Atsalakis
The Budget of the 2010 is bound to demonstrate a loss of 22,17 billion € that corresponds to the 9,1% of the Gross National Product (GNP). GNP was estimated at 240,15 billion € for 2009. Under the present circumstances it is doubtful if the government will be able to achieve to restrain the loss below the estimated one.
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
The accumulated debt on 31/12/2009 reached the amount of 298,5 billion €. The development of the debt since 2000 is shown in the following table:
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
The total debt of 298, 50 billion €, corresponds to nearly 124% of GNP.
The following table shows the amount of increment of the public debt per year from 2000 until 2009 in absolute numbers:
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
The following table shows the amount of increment of the public debt per year from 2000 until 2009:
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
The following four years from 2011 till 2014 the public sector should borrow in order to pay back old bonded capital of about 120 billion €, an amount that corresponds to the 50% of GNP, according to the following table:
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
The amount of 120 billion € should be added to a sum of about 10 billion € government bonds that expire every year. That is a total of 160 billion €.
Every year deficit should be added to this amount which if we suppose that on an average basis in the following years will be 10 billion €, this means that a loan of extra 40 billions will be required so as to cover the loss. Therefore, the total borrowed needs of the country in the next four years will reach the sum of 200 billion € that is almost the amount of the annual GNP of Greece.
At this present time, Greece due to Euro, has lost the benefit of creation in the framework of competitiveness through the use of the depreciated local currency. Lack of competitiveness is depicted in the reduction as well as in the following table which shows imports-exports. Greek Imports in 2009 and in 2008 were three times more than exports according to the table below:
http://www.e-inon.gr/magazine/wp-content/uploads/2017/05/10en2010.pdf
In 2009 alone, an amount of 33,69 billion € (48,08-14,39=33,69) slipped off Greece in order to import goods. This means that influx of capital is not realised in Greece, which by any means could repay part of the debts of the 200 billion € in the next four years.
Could the public sector cover the Budget loss for the years to come and additionally create surplus so as to commence paying back the excessive debts? Or we are going to carry on borrowing in order to repay old loans resulting in an accumulative debt of 298,5 billion € (on 31/12/2009), which during the first quarter of 2010 reached 312 billion €, and will continue to increase every year?
In 2010 the public sector will gain earnings of about 57 billion €, and expences of 80 billion € demonstrating a loss of 23 billion €, in other words the public sector spends about 2 billion € a month more than it receives. How much longer will we endure to spend more than we earn?
When an economy produces goods and services with high added value, it is acceptable to have relatively low deficit and debts, especially when the expenditures are productive. There is no danger if there is income that derives from productive procedures. Greek economy is neither competitive nor its expenditures are productive. Moreover, there is lack in the basic productive sectors.
Even the sectors that were reinforced in the past through subsidy schemes have been shrunk now relating to the structure of GNP in 2008:
Α) The contribution of Fishing in GNP has been shrunk from 0,48% in 2001 to 0,39% in 2008 even though the particular sector received subsidies of 175 million €.
Β) Informatics which could considerably contribute to the increase of productivity in the economy, participates only with a proportion of 0,41% in the creation of GNP.
During the last decade there has been a capital influx on behalf of the European Community of about 40 billion € through subsidy schemes. This money should have been allocated to increase investments of expectation value. Unfortunately, a considerable part was allocated to consumption expenditure. The result is the reduction in the participation of investments in the capital values in the GNP, from 23% that was in 2003 to 16.2% in 2009.
It is difficult for Greece to compete countries which have heavy industry. However, Greece can focus on fields that are able to produce an influx of foreign exchange such as:
1) Data Processing and particularly software
2) Throughput of education services in order to import students and not export them
3) Throughput of medical services
4) and various other activities such as appellation of origin foods etc.
5) Promotion of the Cretan Diet (biological diet) in the sector of foodstuffs combined with tourism or country houses can provide considerable capital influx in the following years.
Now the state should take responsibility. Primarily, it should be reconstructed through the formation of long-term twenty-year schemes, through the wide use of data processing and continuous in-service training in the public sector, so as to facilitate the citizen and not to oppress the citizen and the businessperson. Secondly, initiatives should be designed and created in order economy to launch products and services which can provide considerable foreign exchange influx from abroad. Only in this way can wealth be created and at the same time the revenue accruing to the State will increase so as to decrease the extravagant debt of the public sector.
Source of publication 10th edition In-On