Analysis GREECE
year. In fact between 2006 and 2009 the deficit almost quadrupled from €9.85bn in 2003 to €36.2bn in 2009. Debt increased from 97.4 per cent of GDP in 2003 to 126.8 per cent in 2009 (€298bn).
In early 2010 it was revealed that successive governments had been deliberately misreporting the country’s official economic statistics to keep within the monetary union guidelines. This meant that not only did the Greek government borrow heavily it went on a huge spending spree over the last decade. Public spending soared and public sector wages practically doubled during that time and as the money went out the tax income was hit because of widespread tax evasion. When the global financial crisis hit Greece was ill-prepared to cope.
In May 2010 the government deficit was revised again and was said to owe around €300bn. As a consequence the IMF agreed to a rescue package which involved giving Greece an immediate €110bn spread over three years on the condition that Greece slashed public spending and boosted tax revenue.
With that in mind the government has had to adopt a medium term austerity program which includes cutting government spending, freezing public sector workers pay, cuts in civil servant benefits, decreasing tax evasion, hiking VAT from 11 per cent to 23 per cent for 30 per cent of goods and services and fuel duty and reforming health and pension systems. Greek labour unions are now striking over the austerity program and there have already been public protests over the calls. Meanwhile its fiscal situation and negative press is having a detrimental affect on the country’s tourism industry which has seen revenues decline over the last two years by around seven per cent.
The tourism industry is a major source of foreign exchange earnings and revenues and accounts for around 15 per cent of Greece’s total GDP and employs around 16.5 per cent of the workforce. On average the country usually pulls in around 17 million tourists each year but arrivals dropped by eight per cent last year. The government has set aside €75m to promote Greece and usually this sector brings around €11bn and is the 12th most popular destination in the world.
TIME FOR A CHANGE Greece’s gambling background is of course well documented. Traditionally gaming was restricted to the casino market with amusements permitted in arcades and in street sites. Of course illegal slots were rife and even video games would pay out money.
G3 I MAY 2011 I PAGE 56
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