According to the data released on Thursday, the Greek budget deficit has reached to 13.6 percent of its GDP. The Greek Prime Minister, George Papandreou announced on Friday that his government was seeking to activate assistance from IMF and the European Union, totaling $60 billion as loan financing.
According to available statistics, Greece needs more than $13 billion to cover part of its debt coming due in May 2010. The total debt comes to about $400 billion, out of which $72 billion is due this year.
Because of the crisis in Greece, fellow eurozone members are worried, as a troubled Greek economy will surely pose problems to the euro economy, and the euro currency. Hence, it is in the best interest to all the member countries to salvage Greece.
We all have heard on the news that Greek authorities implemented a series of austerity measures; including tax increases, and wage cuts for government employees. This has led to demonstrations and unrest across the country. Civil servants conducted large demonstrations and strike in Athens.
All these sound familiar, right? The Maldives budget deficit was 26.1 percent of GDP in 2009, and is expected to fall to only 18.7 percent of GDP even this year. Maldives could be the country with the highest government deficit as a percentage of GDP in the whole world. We also could be the only country with the highest government wage bill as a percentage of GDP. We are spending about Rf 4 billion within a year to pay for salaries of all public employees; including civil servants, politicians, parliamentarians, and those in the independent institutions. Meaning we spend about Rf 400 million every month, only on salaries!
Our present government announced several austerity measures as well, including reduction of salaries, and reducing the number of civil servants. What followed is similar to what is happening in Greece. I say, there might come a time, when the international partners will abandon us, asking us to manage our expenses within our means. We are not Greece; there is no interest for the Europeans to save us. Our economy is insignificant to the region, and the world. Unless we manage our expenses and our economy, we will not be able to come out of this economic recession.