hat is the question facing the Eurozone and the Greek citizens. The story is a Greek tragedy, with the government playing the main protagonist of tragic hero.
.
As with any tragedy, there must be a beginning. Explaining government finances is no different to one’s personal finances. A country earns X and spends Y; Y should ideally not exceed X. The Greek debt crisis was no spontaneous combustion. It was created over decades of gross financial mismanagement by governments before.
The Greek government were reporting the figure to be 3.4%. Slightly worrying, but not uncontrollable. Not until it turned out to be a lie. It was over 15%. This revelation was poorly timed. It coincided with one of the biggest financial recessions in history and lenders started to enact stricter borrowing rules.
"This series of unfortunate events meant the country’s borrowing costs skyrocketed"
T
In the theatrical art form of Greek tragedy, the plot typically unfolds when the main protagonist of the tragedy commits a terrible crime without realising how foolish and arrogant he has been. Then, he slowly realises his error and his world crumbles around him. Let us unravel what Aristotle defines as “the arrangement of incidents” – the plot.
Over decades, the Greek government had the financial prowess of a Jozi “businessman” in a club. The objective was to spend with no consideration of how much you are actually earning. Their most reckless spending was on government payrolls. They created an expectation to their people that they could keep this going on forever. This opulent lifestyle was not funded by taxes. The Greeks were as good at collecting taxes as they were at managing their money – pretty poor.
This series of unfortunate events meant the country’s borrowing costs skyrocketed, and within a blink of an eye, it became impossible for Greece to repay its debt without taking out more loans. In 2010, the EU and the IMF agreed to bail out Greece. .
This brings us to the turning point which changes the protagonist’s fate – the climax.
In order to continue meeting the citizens’ expectations, the Greeks turned to fellow European Union members and began to borrow. Countries and private lenders alike were not too bothered with lending the money because, as a member of the European Union, Greece was required to adhere to strict financial restrictions that included not allowing its national budget deficit to exceed 3% of GDP.
MCEBO NTOMBELA