A new report by the International Monetary Fund executives released yesterday reveals shocking data, as they confirm that Greece paid the highest price compared to any other country, in order to stabilize its banking sector during the global economic crisis.
In a report titled “The Long Shadow of the Global Financial Crisis: Public Financial Intervention”, the two authors attempted for the first time ever to fully record what cost the national governments to support their banks during the decade 2007-2017.
The cost was almost half of GDP
The total cost of bank aids reached 46.3% of GDP in 2017, which was estimated at EUR 83 billion. This amount includes the borrowing guarantees offered by the State.
However, direct recovery was only 21.9% of GDP. Therefore, the net budgetary cost is estimated at 24.4% of GDP.
From this figure, the report’s authors deduct the current value of the assets held by the Treasury, that being the bank shares that still remain in the Financial Stability Fund (3.3% of GDP), as well as the State’s indirect fiscal benefits (interest and commissions on loans and guarantees), amounting to 1.1% of GDP.
As a result, the total budgetary expenditure reaches 19.9% of GDP in 2017, thus amounting to EUR 36 billion. For Cyprus, the figure stood slightly lower, at 19.2%, while for Slovenia it was at 12.1%.
The Fund’s executives document extensively, in their chapter specifically made for Greece, all the individual interventions made to support the banks with taxpayers’ money.
As they point out, in Greece interventions were made in 19 banks, only four of which remain in operation today, as Greece’s banking system was restructured during the economic crisis, with the formation of four large groups./ibna