Back in 2012, at the height of the Greek financial crisis, nobody owed the Greek tax authorities as much as Nikos Kasimatis: 952,087,781 euros. The largest part was accounted for by fines, penalties and interest. An unbelievable amount, also for the debt republic of Greece. The accountant and tax advisor began his sentence in June 2009 in the notorious “Diavata” prison near Thessaloniki. Kasimatis had been sentenced to 533 years’ imprisonment. Of this, 150 years was accounted for by failure to pay debts to the state, the remainder of the imprisonment of 533 years for complicity in issuing bogus bills.
At that point in time, nine years ago, the legally binding tax debts of all Greeks had risen to the all-time high of 45 billion euros – an increase of 14 billion euros since October 2009, when Greece was headed for de facto national bankruptcy with caracho.
Today, nine years later, the legal tax debts in Greece have more than doubled. Specifically, four million of the almost eleven million Greeks at the end of September 2021 with exactly 109.41 billion euros were in the chalk with the tax authorities – a new historical record. Trend: increasing. In the first nine months of the current year alone, the Greek tax debts increased by a further four billion euros.
Outstanding social benefits have reached record levels
In addition, the outstanding social security contributions to the statutory insurance fund Efka, which had to be paid by a total of 2.09 million debtors at the end of September 2021, rose to the all-time high of 38.77 billion euros. Here, too, the following applies: the trend continues to rise.
On top of that, the loans taken out with Greek commercial banks such as consumer loans, home loans and loans for companies amounted to a total of 162.04 billion euros at the end of June 2021 (more recent data are not yet available). Bad loans account for 34.57 billion euros of this – bank loans that are no longer serviced by the debtor for at least 90 days.
As of the end of June 2021, the Greek commercial banks had sold a further 61.75 billion euros of these non-performing loans to credit management companies (EDADP) specially licensed by the Athens Central Bank (TTE). Although these loans no longer appear in the books of the commercial banks, they are of course not out of the world – and certainly not from Hellas. The private debtor is called upon by the new creditors, the EDADP, to settle his debt – often with crude methods.
Private debt amounts to 244.5 billion euros
In total, the private debt of the Greeks from legally binding tax debts, outstanding social contributions and bad bank loans currently amounts to 244.50 billion euros, for which hefty fines, penalties and interest are due as long as the debt has not been paid off. If you add the bank loans in the “green” range, which are (still) serviced, it even amounts to 371.95 billion euros.
The Greeks are stuck in the swamp of debt not only because of their exploding private debts. In addition, there is the Greek national debt, which triggered a massive financial crisis in this country in the spring of 2010. Despite the following rigorous austerity course in Athens: The mountain of Greek debt has grown even bigger since then.
Interest costs for public debt at 6 billion euros annually
At the end of June 2021, the Greek national debt amounted to exactly 387.32 billion euros – and the trend is rising here too. In the first six months of this year alone, the liabilities of the Greek state increased by a further 13 billion euros. This time, this is largely due to the increased government spending since the outbreak of the corona pandemic in early 2020 to cushion the economic and social consequences of fighting the pandemic.
Greece’s public lenders such as the EU, the European Central Bank and the International Monetary Fund held 77 percent of the Hellenic national debt at the end of June, while private lenders held the remaining 23 percent. The Hellenic tax authorities currently have to shell out an effective annual interest rate of 1.59 percent on average.
That seems like a moderate rate of interest. With a national debt of 387.32 billion euros, the annual interest costs alone currently amount to a good 6 billion euros. If the Greek national debt continues to grow, or if the APR increases, or if both happens, then the Hellenic tax authorities have to shell out even more for interest alone. A dangerous spiral of debt.
Total debt at almost 760 billion euros
If you add the private debt of the Greeks (371.95 billion euros) and the slightly higher Greek national debt (387.32 billion euros), the total debt comes to 759.27 billion euros. What is explosive is that the total debt in Greece from just under 760 billion euros is offset by annual economic output that slumped in 2020 to just 165.32 billion euros and thus to the level of the early noughties. The total debt of the Greeks is four and a half times as large as the Greek gross domestic product (GDP) in the previous year.
Even the shadow economy, which is traditionally large in Greece, does not change that much. It is estimated at around 20 percent of the official economic output. This would mean around 33 billion euros extra, not a real “game changer” either.
Economic output should increase by 6 percent this year
In any case, the Greek government under the Conservative Prime Minister Kyriakos Mitsotakis looks to the future with sparkling confidence. According to their forecasts, Greek GDP will grow by a good 6 percent this year after the disaster in the previous year. Their strategy is: Greece and the Greeks should grow out of debt.
Experts in Athens see it a little differently. The immense debts are jeopardizing the upswing, they warn. In particular, the soaring private debt of the Greeks should not be paid off. They emphasize that only a fraction of the private debtors either respond to the various repayment plans offered or, in practice, follow them consistently after an agreement. On top of that, there are always new private debts. True to the motto: “The plirono!” (“I’m not paying!”) The state seems powerless. The inevitable consequence: the private debt mountain of the Greeks is getting higher and higher.
If the ultimate debt question remained in the unspeakable Causa Hellas: Who should pay for all of this? Seizures would do something, but they are obviously not enough. What is certain is that the entire private wealth of the Greeks, consisting of movable assets such as savings and time deposits, cash or stocks, as well as immovable assets such as real estate, has collapsed by around 50 percent since the beginning of the crisis and is now only slightly higher than the steadily increasing total debt from public and private debt currently amounts to almost 760 billion euros.
The Athens daily “Efsyn” recently summed up the dilemma and headlined: “In the stranglehold of public and private debt – growth in the shadow of debt”. You could also say swamp instead of shadow.
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