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“For the first time since early 2010, Greece can stand on its own feet,” the European Stability Mechanism (ESM) rescue fund said as Athens exited its final, three-year international bailout program on Monday.
The ESM allocated about $71 billion over the past three years, after an agreement was reached in August 2015 to help the country cope with fallout from an ongoing debt crisis.
“Today we can safely conclude the ESM program with no more follow-up rescue programs,” Mario Centeno, the chairman of the ESM’s board of governors, said in a statement. “This was possible thanks to the extraordinary effort of the Greek people, the good cooperation with the current Greek government and the support of European partners through loans and debt relief.”
In 2010, Greece was declared at risk of default after struggling with massive debt, loss of investment and huge unemployment. Overall, nearly $300 billion in emergency loans were provided in three consecutive bailout packages from a European Union bailout fund and the International Monetary Fund (IMF). In exchange, Athens was required to put in place severe austerity-based measures and reforms.
The completion of the loan program is a major accomplishment for Greece, but the country still faces an uphill battle to regain its economic stability.
The office of Prime Minister Alexis Tsipras described the final bailout loan last week as the “last act in the drama. Now a new page of progress, justice and growth can be turned.”
“Greece has managed to stand on her feet again,” his office said.
Economic growth in Greece is slowly growing again, tourism is up nearly 17 percent in Athens this year, and once-record levels of joblessness are finally receding.
However, the country still faces massive challenges, including weak banks, the highest debt load in the European Union at 180 percent of GDP, and the loss of about a half-million mostly younger Greeks to Europe’s wealthier neighbors. Greece will also need to continue to repay its international loans until 2060.
The country’s three international bailouts took Europe to the brink of crisis.
The financial troubles exposed dangers in the European Union’s common currency and threatened to break the bloc apart. The large debt that remains in Greece and an even larger debt in Italy continue to be a financial danger to the EU.
The bailouts also led to regular and sometimes violent demonstrations in Athens by citizens angry at the government’s budget measures required by international lenders in return for the bailouts.
While Greece has begun to make economic progress, economics say the bulk of the austerity measures will likely need to remain in place for many years for the country to tackle its massive debt.
Some international economists have called for part of Greece’s loans to be written off in order for Greece to keep its ballooning debt payments in check. However, any kind of loan forgiveness would be a tough sell in Germany where the initially bailouts were unpopular.
The austerity measures included massive tax hikes as high as 70 percent of earned income and pension cuts that pushed nearly half of Greece’s elderly population below the poverty line.
Pensioner Yorgos Vagelakos, 81, told Reuters that five years ago he would go to his local market with 20 euros in his pocket, while today, he has just 2 euros. He says for him, the bailout will never end.
“It’s very often that just like today, I struggle, because I see all the produce on display at the market and I want to buy things, but when I don’t have even a cent in my pocket, I get really sad,” Vagelakos said.