Difference between National Debt Of Portugal and National Debts Of Greece
Practically every country owes a debt to other countries, the World Bank, or some other government or financial institution. This is actually quite normal, since developing countries need some financial assistance to some degree or another. Nevertheless, the national debt of a particular country has a lot to do with the state of its economy. In this article, we compare the national debt of Portugal to the national debt of Greece.
The State Of The National Debt
In 2009, the national debt of Portugal exceeded the country's GDP by as much as 80%. This has caused a significantly detrimental effect on the Portuguese economy, and adversely affected the financial sustainability of the State.
The national debt of Greece was in a similarly precarious state at the beginning of 2010, when there were widespread concerns about the country's huge financial obligations. A number of key government figures have subsequently blamed the crisis on hedge funds, as well as the actions of speculators.
Mitigating Factors
In a New York Times article, contributor Robert Fishman suggested that a significant factor in the Portugal’s huge national debt is the consecutive speculation moves by bond traders and rating agencies. It is interesting to note that before these occurrences, Portugal was one of the fastest growing economies in the EU. In fact, the country was comparable and even surpassed many other countries in Western Europe.
In Greece, a prominent newspaper published an article in which it was stated that a large public deficit is one of the key features of Greek economy since democracy was restored in 1974. Shortly after that event, the Greek government set about coaxing the left leaning sectors into the economic mainstream by way of jobs, pensions, and other benefits, thereby running up large deficits in the process.
Measures Taken
Along with other countries in the EU, Portugal set about making radical changes in economic policy as a means to deal with the financial crisis. Beginning in September 2010, a number of measures were implemented, among them an austerity package implemented by way of tax hikes and salary reductions for government employees.
As for Greece, the government has since applied for a bailout package from the EU/IMF. This package consists of high-interest loans, and the IMF has since announced its approval of the request. The government also implemented a series of austerity measures along with a request for a larger loan package from the EU/IMF. Germany, which was the last country to give its approval, has since agreed to the request as well.
Summary
National Debt of Portugal
- Exceeded the country's GDP by as much as 80% in 2009
- Blamed on consecutive speculation moves by bond traders and rating agencies
- Government has made radical changes in economic policy
National Debt ofGreece
- Was in a similarly precarious state at the beginning of 2010
- Blamed on hedge funds as well as the actions of speculators
- Government has since applied for a bailout package from the EU/IMF
