Together, the countries in Europe have lent the Greek government 195 billion euros. The Dutch contribution to this loan is 11.9 billion euros, i.e. more than 700 euros per Dutch resident. The Greek government debt now consists mostly of loans from European countries instead of government bonds.
Greek government debt 176 percent of GDP
In 2010 it turned out that the Greek government deficit for 2009 was larger than previously reported. Interest on government bonds subsequently rose substantially, and the Greek government debt rose to 171 percent of the country’s gross domestic product (GDP, the volume of the economy). This was nearly three times the European debt norm of 60 percent. A large-scale restructuring of the Greek debt started in 2012, resulting in a substantial reduction in both the government debt and payable interest. In the third quarter of 2014, the relative government debt rose again, to 176 percent of Greek GDP, the equivalent of 29 thousand euros per Greek. After Greece, Italy and Ireland have the highest debt, both above 130 percent of GDP.
From bonds to long-term loans
Before the Greek debt crisis began, government bonds accounted for more than 80 percent of the Greek government debt, just as in most eurozone countries. Bonds are tradable debts whose interest rate at issue is determined by the market. Most of them are owned by financial institutions. During the crisis, the interest on Greek bonds rose so strongly that it became more difficult for Greece to repay its debts. The Greek government then borrowed (non-tradable) money from EU countries and international institutions. The interest on these loans was lower than the interest at which Greece could borrow on the market. Since the restructuring of the Greek debt, it thus consists mainly of long-term loans. In the third quarter of 2014, Greece had 245 billion euros outstanding on loans, out of a total debt of 316 billion euros. In addition to Greece, Portugal, Ireland, and Cyprus are also dependent on loans.
Netherlands fifth largest lender to Greece
The contribution of each European country is determined on the basis of GDP. As a result, one quarter of the amount was lent by Germany, followed by France, Italy and Spain. The Netherlands is the fifth largest European lender, with 11.9 billion euros: 6.1 percent of the total loan amount. In addition to these European loans, the IMF also lent money to Greece, while the European Central Bank also owns Greek government bonds. These both imply indirect financial risks for the Dutch government, as the Netherlands may have to provide extra capital to these institutions if Greece defaults on its debts. Although the ECB has made a profit on the Greek government bonds, since 2013 the countries in Europe have transferred this in full to Greece. For the Netherlands, this concerned more than 100 million euros per year in 2013 and 2014.