Greece needs to sell 6 billion euros of state-controlled assets by 2018 – to fulfill terms of the country’s previous bailout – before securing more cash.
The asset sales are a maneuver to privatize parts of Greece’s infrastructure and to satisfy the ongoing 86 billion-euro bailout with the European Union.
You read that right: 86 billion euros in bailout money.
These asset fire sales include …
- Lenders demanding a larger stake in Greece’s main electricity utility PPC, the largest producer of coal-fired electricity in the European Union with fixed assets of 17.3 billion euros.
- Three bids for a majority stake (67%) in the country’s second-largest port.
- Last year’s sale of a 67% stake in the port of Piraeus – the country’s largest port – to Chinese shipping giant Cosco Holding Co. for 368.5 million euros.
And if you think these sales are going to fix things for Greece, think again.
Despite these recent moves, there remain differences among Athens, the EU and the IMF over labor and fiscal issues. All of which stand in the way of a crucial bailout review and delay fresh loans for cash-strapped Greece.
But the bills still need to be paid.
In fact, the Bank of Greece’s governor recently noted that the country’s back was against the wall regarding the second review of Greece’s third bailout program.
To make matters worse, economic data is deteriorating and sentiment remains negative.
A recent Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE) survey indicated:
- That 4-in-10 Greek businesses consider it likely that they’ll close shop in the coming year – that’s a stunning 40%!
- Credit conditions are tightening up, with 7-out-of-10 businesses noting growing liquidity problems and shortages of capital from the markets.
- For every two firms hiring, three plan to cut payrolls in the coming six months.
And that’s not all …
Workers’ rights are the latest sticking point in the bailout deal.
The IMF wants more deregulation in Greece’s labor market and it rejects rolling back previous labor reforms as stipulations for more funding.
But the ruling Syriza Party wants to restore union powers to negotiate wages.
In the meantime, the unemployment rate in Greece stands at 23%. Absolutely mind-blowing!
That’s why I’m not one bit surprised that Greeks are taking money out of their banks left and right.
In fact, Greeks withdrew 750 million euros in February, amounting to 2.3 billion in the last three months.
And get this: Central bank figures indicate the trend continuing in March!
Greece’s problems continue to skyrocket. And they’ve yet to learn that you can’t save a nation drowning in debt by throwing more debt at it any more than you can save a drowning man by throwing more water on him.