12th International Conference ‘Economies of the Balkan and Eastern European Countries’ International Hellenic University, Department of Finance and Accounting, Kavala, Greece University of Rijeka, Faculty of Tourism and Hospitality Management, Opatija, Croatia EBEEC 2020 Opatija, Croatia May 29-31, 2020 12th International Conference EBEEC 2020 - “Economies of the Balkan and Eastern European Countries” Proceedings of the 12th International Conference ‘Economies of the Balkan and Eastern European Countries’ International Hellenic University, Department of Finance and Accounting, Kavala, Greece University of Rijeka, Faculty of Tourism and Hospitality Management, Opatija, Croatia Editors: A. Karasavvoglou, P. Polychronidou, G. Karanovic ISBN: 978-618-84798-5-2 ISSN: 1792-4383 i 12th International Conference EBEEC 2020 - “Economies of the Balkan and Eastern European Countries” TABLE OF CONTENTS ANATOMY OF THE GREEK DEBT CRISIS – A RESEARCH INTO THE EXPANSION OF GREEK GOVERNMENT DEBT DESPITE THE ADJUSTMENT OF STRICT AUSTERITY ........................................ ERROR! BOOKMARK NOT DEFINED. ANALYSING THE PRESENCE OF “TRIPLE DEFICIT” IN TURKEY’S ECONOMY…………………………………………….………..ERROR! BOOKMARK NOT DEFINED. BUDGET ABSORPTION IN GREEK PUBLIC SECTOR DURING THE CRISIS 2010-2018. THE CASE OF STATE CONSERVATORY OF THESSALONIKI .............................................................. ERROR! BOOKMARK NOT DEFINED. MIGRATION FLOWS TO EUROPE AND THEIR INCLUSION IN NATIONAL EDUCATION SYSTEMS OF MEMBER STATES: CHALLENGES AND PERSPECTIVES .................................................... ERROR! BOOKMARK NOT DEFINED. THE SOCIAL RETURN ON INVESTMENT (SROI) FOR EVALUATION OF THE IMPACT IN INTERNATIONAL COOPERATION HEALTH PROJECT IN ALBANIA: A CASE STUDY ...................... ERROR! BOOKMARK NOT DEFINED. BRAND LOYALTY IN PROFESSIONAL SPORTS................................................. ERROR! BOOKMARK NOT DEFINED. LOCAL TOURISM AND ECONOMIC CRISIS.THE CASE OF THE REGION OF EASTERN MACEDONIA AND THRACE. ..................................................................................................................... ERROR! BOOKMARK NOT DEFINED. SECONDARY EDUCATION AND LOCAL LABOUR MARKET. CASE STUDY OF THE 1ST VOCATIONAL UPPER- SECONDARY SCHOOL OF DOXATO. ............................................................... ERROR! BOOKMARK NOT DEFINED. THE IMPACT OF ISLANDS TRANSPORTATION POLICY. CASE STUDY OF A NORTHEAST AEGEAN ISLAND. ERROR! BOOKMARK NOT DEFINED. THE EFFECT OF EDUCATION ON UNEMPLOYMENT RATES CONSIDERING THE EXTENDED TIME FRAMEWORK OF THE GREEK DEBT CRISIS. .......................................................................... ERROR! BOOKMARK NOT DEFINED. THE ECONOMIC EFFECTS OF THE PANDEMIC COVID-19: GREEK CITIZENS EXPRESS THEIR FAITH IN THE GREEK GOVERNMENT FOR THE PROTECTIVE MEASURES TOWARD THE PANDEMIC AND ECONOMIC MEASURES TOWARD A NEW ECONOMIC CRISIS ............................................................. ERROR! BOOKMARK NOT DEFINED. ii 3 12th International Conference EBEEC 2020 - “Economies of the Balkan and Eastern European Countries” ANATOMY OF THE GREEK DEBT CRISIS – A RESEARCH INTO THE EXPANSION OF GREEK GOVERNMENT DEBT DESPITE THE ADJUSTMENT OF STRICT AUSTERITY Clio Pavlidou1, Dimitrios Valsamidis2, Fotini Perdiki3, Vasilios Ferelis4 1Department of Accounting and Finance, International Hellenic University, Campus of Kavala, Agios Loukas, 65404 Kavala, Greece, [email protected] 2Department of Accounting and Finance, International Hellenic University, Campus of Kavala, Agios Loukas, 65404 Kavala, Greece, [email protected] 3Department of Accounting and Finance, International Hellenic University, Campus of Kavala, Agios Loukas, 65404 Kavala, Greece, [email protected] 4Department of Accounting and Finance, International Hellenic University, Campus of Kavala, Agios Loukas, 65404 Kavala, Greece, [email protected] ABSTRACT From 2000 to 2009, the Greek economy experienced a period of significant economic growth. This rate of growth in 2009 was violently reversed and from this point began the downward course of the Greek economy. Beginning in May 2010, when the first Memorandum was signed, a major effort was launched by the Greek government to consolidate its budget and implement structural reforms. From 2012 to 2015, Greece achieved a remarkable fiscal adjustment, noting a significant and even continuing decline in Gross Domestic Product (GDP), which unfortunately led to a deep recession and rising unemployment. The recession that the country experienced during the years of the Memorandums has been characterized as the largest post-war recession. Concerning GDP components, both the private and public sectors shrank and the largest decline was in gross fixed capital formation. We see, therefore, that the Mnemonic recession tends to assume lagging characteristics. The present study presents a brief overview of the Greek debt crisis from 2009 onwards and the measures taken and an the analysis of data by explaining (a) why after 2008 the influx of Greek government debt was a problem (b) why, while an austerity program was implemented in the country, the debt increased and (c) why, while 2012 was a “haircut” of Greek debt, it remained high. The research methodology involves literature review and official national, European and world level government sources such as Hellenic Statistical Service, Public Debt Management Agency, Eurostat, European Stability Mechanism and International Monetary Fund. The main investigation period is 2008 - 2018, but data from the 70s to the first half of 2019 are generally considered and reported as well. The research contributes to the thorny theme of Greek Debt Crisis. The future researcher could extend and enlarge the research for the forthcoming years. KEYWORDS Greek Crisis, Public Debt, Strict Austerity, Debt Inflation, Debt Restructuring. JEL CLASSIFICATION CODES E00, O19 1. INTRODUCTION Beginning in May 2010, when the first Memorandum was signed, the Greek government launched a major effort to consolidate the country's budget and implement structural reforms. From 2012 to 2015, Greece achieved a remarkable fiscal adjustment, marking a significant and even continuing decline in GDP, which unfortunately led to a deep recession and rising unemployment. From 2000 to 2009, the Greek economy experienced a period of significant economic growth. This rate of growth in 2009 was violently reversed and from this point the downward course of the Greek economy began. The recession that the country is experiencing during the years of the memoranda has been characterized as the largest post-war recession. Concerning GDP components, both private and public sectors shrank and the largest decline was in gross fixed capital formation. We see, therefore, that the Mnemonic recession tends to assume lagging characteristics. 4 12th International Conference EBEEC 2020 - “Economies of the Balkan and Eastern European Countries” Greece was already facing a serious unemployment problem, as in 2009 and before the signing of the memorandum, the unemployment rate reached 9.5%. Following the signing of the memoranda and the implementation of fiscal austerity measures in 2012, the Greek unemployment rate reached 23.6%, the highest rate in the entire European Union (23.6%), with an even higher increase in 2013. The causes of the increase of the unemployment rate, amongst others, were: job losses, increase of unskilled staff, restriction on creating new jobs due to the recession, as well as the shrinking of the public sector. There was also an increase in the long-term unemployment rate (unemployed people for over 12 months), female unemployment and young unemployment rate (unemployed people under 25), which were also the highest in Europe. Greece's appeal to the Support Mechanism forced it to apply excessive fiscal adjustment, which tragically worsened the real economy. The failure to achieve the targets set by the Troika in 2010 led to a new round of fiscal austerity with an emphasis on spending cuts. The measures taken reached the amount of 15.5 billion € (or 7% of GDP). In 2011 the adjustment continued with undiminished intensity, as the country's economic position was burdened by the failure to achieve the goals of last year's adjustment. On the other hand, the progress that was made in reducing the general government's deficit - mainly the primary budget deficit - could be easily described as exceptional. Unfortunately, despite the tough fiscal policy that was implemented in Greece after 2010, the evolution of public debt over the years has been disappointing. Public debt, even after austerity, rose sharply despite the two restructurings (the PSI and bond repurchase). The size of the debt continues to increase due to primary deficits and borrowing costs, but the main reason for this increase is the deep and prolonged recession (the ratio of “Public Debt / GDP” worsens as GDP decreases significantly - snowball effect). Moreover, negative effects - apart from the fiscal adjustment - have also resulted for Greek citizens from the policy of internal devaluation through wage cuts. The implementation of significant wage reforms led to a reduction in the average nominal wage by 13% in 2012 and 9.5% during the period 2010-2011. Despite of the fiscal effort, debt sustainability remains an Achilles' heel of the adjustment program (Mourmouras, 2015). Another aspect of the crisis is examined by Baltas in his article "The Greek financial crisis and the prospects of the Greek economy" (2013) regarding