• Home
• /
• Markets

Greece in Great Depression: PM

Greece is in a “Great Depression” similar to the American one in the 1930s, the country’s Prime Minister Antonis Samaras told former US President Bill Clinton on Sunday.

Samaras’s comments come two days before a team of Greece’s international lenders arrive in Athens to push for further austerity measures if the debt-laden country wants to qualify for further rescue payments and avoid a chaotic default.

Athens wants to soften the terms of a €130-billion bailout agreed last March with the European Union and the International Monetary Fund, to soften their impact on an economy going through its worst post-war recession.

Greek GDP is expected by the end of this to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6 per cent in the first quarter.

“You had the Great Depression in the United States,” Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen. “This is exactly what we’re going through in Greece — it’s our version of the Great Depression.”

Athens must reduce its budget deficit below three per cent of GDP by the end of 2014, from 9.3 per cent 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.

Clinton criticised Greece’s lenders for focusing excessively on austerity, saying Athens will be more likely to repay its debt if its manages economic recovery first.

“(It) is self-defeating... if every day people are saying this may or may not work to give us back a 100 cents on the dollar, so give us more austerity today,” he told Samaras.

“People need something to look forward to when they get up in the morning — young Greeks need something to believe in so they can stake their future out here,” Clinton said. —