It’s no secret that the protracted negotiations between Athens and its creditors are taking a toll on the Greek economy in general, on the Greek banking sector more specifically, and on Greek citizens most tragically.
For banks, each day without a deal is one day closer to outright insolvency. Even if the ECB continues to raise the ELA ceiling and refrains from raising the haircut on the assets Greek banks pledge for emergency liquidity, the banking sector will run out of collateral by the end of next month.
As for Greek citizens, there are likely days when mental exhaustion sets in amid the constant stream of contradictory headlines and incessant media coverage, but any feelings of indifference are inevitably interrupted by stark reminders of a grim economic reality such as empty pensioner bank accounts [11] and looped video clips [12] of the Nazi occupation meant to rally the country behind a desperate war reparations claim on Berlin.
Now, thanks to a new report from the Hellenic Confederation of Commerce and Enterprises, we can quantify the daily economic toll of failed negotiations. Here’s more from Kathimerini [13]:
An average of 59 enterprises close every day of the working week and 613 jobs are lost, while every day, with the market facing a cash crunch, the economy loses 22.3 million euros from its gross domestic product, according to a report published by the Hellenic Confederation of Commerce and Enterprises (ESEE).
The country reportedly needs billions in new financing...
A deal with the country’s creditors is more urgent than ever, ESEE stressed, but the economy would need as much as 25 billion euros in financing in order to restart, as losses from the first five months will be hard to cover over the rest of the year, argued ESEE.
This uncertainty has hit the local economy after five years of crisis, during which retail commerce turnover shrank by 26.2 percent. Things were worse for wholesale commerce, with turnover dropping 37.1 percent, while the car market crumbled by 61.9 percent in the same period, the confederation’s data show.
...and the banking sector is simply unable to make loans...
Liquidity is becoming an unfamiliar term in the market as 95 percent of applications for loans are rejected every day by commercial banks, while only one in 10 enterprises dares to ask for funding from the country’s four systemic lenders, the ESEE report showed. The absorption of funding tools for business liquidity stands at 40 percent, while in the funding of commerce the rate does not exceed 12 percent.
...meaning it may be time for Syriza to realize that giving up on campaign promises is preferable to forcing citizens to confront an economic situation which is quite literally getting worse by the day...
ESEE is urging the government in dramatic terms to reach a deal with Greece’s creditors even if it’s not a great deal.
“A final agreement, even if it is mediocre or below expectations, is certain to allow the Greek economy to feel free at last to operate for the remainder of 2015,” read Monday’s ESEE statement. “Financial and political time are running dangerously short, and reaching a sustainable agreement with our partners is vital as it is directly associated with the country’s capacity to draw liquidity from the European funding tools,” it added.
And meanwhile, support for the government which just four months ago was billed as the savior that would lead the Greek people out from under the thumb of overbearing EU creditors on the way to restoring a sense of Hellenic pride, is now seeing support for its mandate dwindle, suggesting that if a deal isn’t struck soon, Syriza may find itself facing pressure to cede power.
Via Bloomberg:
Support for Greek govt’s negotiating strategy in bailout talks with creditors falls to 35% in University of Macedonia poll, broadcast on Skai TV, from 72% in Feb. survey by same pollster, 45.5% in April.
* * *
Full text from ESEE [14] (Google translated)
The ESEE hopes that still remain a few days, until, at least as prevalent last view in the debate, an "honorable" agreement with creditors. The final agreement, even "moderate" to qualify or below expectations be, it is certain that will allow the Greek economy to function as a "spring", as the market will finally left free to work, the remaining months of 2015.
Until then, every day that passes, lost 22.3 mil. € of the GDP Country, every 24 hours closed 59 businesses and full-time employment decreased by 613 jobs. The market is at a standstill and has literally "dry" and liquidity injections are not able to revive. Now wants "blood transfusion" at least 25 billion euros to reboot after losses in the first five months will hardly replenish in 2015. Typically, mention that the last five years, there was a fall in turnover in retail trade -26.2% wholesale -37.1% and -61.9% in cars. The current account surplus was marginally by 0.9% of GDP in 2014, imports and exports of goods to show a rise of 4.7% and 4.9% respectively. Regarding the liquidity in the market, 95% of loan requests rejected daily by commercial banks, on mandates and rules of the ECB in T.t.E. Now only 1 in 10, SME asks disappointed lending systemic banks. The absorption of financial tools for business liquidity does not exceed 40% and trade finance only 12%!
The deposits in Greek banks is around 138 billion €, almost 58% of total loans loans totaling € 219 billion. At least 1/8 of deposits banks have borrowed to the State, for the renewal of Treasury bills. The deposits are gone, calculated from December until today to 35 billion €, of which € 4 billion in April. Banks are their limits and available are not adequate due to shifting commitments. Liquidity no more than 2.5 billion €, while the daily needs of the systemic banks covered with the dropper by ELA. In addition, recorded negative credit growth over 52 months, with current levels at -2.5%. Since last year's corresponding March, less by 639 million. €, provided by the banks to the real economy. Also there was an increase of loans in the "red" in the years 2013-14 by 32%, while the € 77 billion at the end of 2014, now stand at € 80-82 billion, of which € 42 billion is business loans, € 28bn mortgages and the remaining € 12 billion consumer. Of the € 23 billion of loans in the media, the € 10 billion are in the red, with a repayment delay rate to 43%. In the first four months of the year, the budget shows surprisingly, primary surplus amounting to € 2,16 billion, when the forecasts were to form a primary deficit of the order of 287 mil. EUR. Expenditure is approximately EUR 2 billion below the target, confirming that the government has moved to "internal default", but which has resulted in a "suffocating" the domestic economy. Moreover, the public debt rose to 177.1% of GDP 2014 and reducing the budget deficit to 3.5% of GDP from 15.6% in 2009. We have revised the growth estimate for 2015 from 2.5% to 0.5% or 0.2% and estimates of reduction in the primary surplus by 50% from € 2,4 billion in 2014 to € 1,2 billion. The overdue obligations amounted to € 4,4 billion, with € 688 m. For outstanding tax returns, while the deficit in the pension funds amounted to € 349 m. In 2015 from a surplus of € 798 m. In 2014. In the period from 2009 to 2014 the decrease of GDP It reached 24.6% and is estimated at around € 179 billion in 2014. With regard to deflation, for more than two years, stood at around -2.1% in April 2015, compared with -1.3% in 2014. Specifically, deflationary trends are due to decreases recorded in a series of individual indicators: -6.8% in Housing, Transport -4.0%, -3.3% on other goods and services -3.1% Education, -2.1% in Health, -2.0% in Clothing and footwear, -1.8% in Durable goods - household goods and services, 1.8% in Recreation - Cultural activities, -0, 5% on Hotel-Cafe-Restaurant. Conversely, upward trends were recorded in other indicators: 1.9% in Alcoholic beverages and tobacco 0.9% in Food and non-alcoholic drinks. These indicators will certainly altered by the changes brought about by the implementation of the single VAT rate since September 2015. Based on the above data, the chairman of EERA Mr. Vasilis Korkidis, has repeatedly stressed that both the economic as and political time ends and dangerous to reach a viable agreement with our partners is a key challenge, as it is directly linked to the country's ability to raise funds from the European financial tools. The real challenge, however, for the market, but for the majority of Greek society, is what developmental conditions will be created. The position of the representatives of the productive world, on this, it is clear, as we look forward for the country, to go directly to the necessary development reforms, in partnership with the healthy elements of the economy in order to provide new, quality jobs, promoting Greece creation, innovation and openness, rather than recession, austerity and exclusion. The official position of the Greek trade and SME business is to finish the four-month standstill of the market status "No Deal, No Grexit", replacing the content of the original agreement "money for debt and thanks for the Country" in the economic strategy "Money for the purchase and development of Country" .
