Greece’s troubles are far from over despite escaping its bailout plan

Greece is finally out of its protracted bailout. Eight years and almost €300bn (£269bn) after Athens first received aid from the eurozone, European Central Bank and International Monetary Fund, the country is finally able to stand on its own two feet again.

Instead of relying on new payments from those creditors, the government will fund itself from the financial markets.

“The economy, the society and the country as a whole are now entering a new phase,” said a Greek government spokesman on Monday. Jean-claude Juncker, the European Commission president, called it “a new chapter” for the nation.

That is the official story, at least. Greece still has support because the bailout funds are still in place, but will be paid back at very low rates of interest over decades.

As a result, it only has to raise funds in the financial markets to service non-bailout debts and to borrow as it gradually repays the public funds.

Even that will be a challenge. The drawn-out crisis crushed the Greek economy. Gross domestic product is around a quarter below its peak before the financial crisis. Growth has returned, but there is a lot of lost ground to recover.

Unemployment has only just fallen to below 20pc, while hundreds of thousands of Greeks have upped sticks. The country suffered net emigration in every year from 2010 to 2016.

At the peak of the exodus in 2012, Greece had 125,000 emigrants, double the 58,000 immigrants it received.

Such a drain of workers puts more strain on the government’s ability to pay its debts, with a smaller pool of potential taxpayers supporting a rising burden, which is illustrated in its public debt figures. The debt-to-gdp ratio has only stabilised but not fallen since 2016. It now stands at 180pc of GDP.

Greece plans to run a primary budget surplus of 3.5pc of GDP in every year to 2022, and maintain a smaller surplus after that.

A primary surplus is a measure of public finances which are in the black, before debt interest payments are taken into account.

As a result, it can start cutting its debt burden over the coming years, but that will be a gradual process.

Eventually its bailout loans will expire and the country will be required to pay market interest rates on more of its debts.

Combined with its ageing population, this will make the burden more severe once more.

The IMF has warned that this level of budget surplus itself risks undermining GDP growth in the long run, as it sucks money out of businesses and households, and reduces the government’s capacity to invest in areas such as infrastructure.

Its economists fear the Greek government’s debts will fall into the 2020s and 2030s, reaching below 150pc of GDP, before rising once more, back towards current levels, by the late 2050s and into the 2060s.

Greece could end up back where it started as a result, with debts again on an unsustainable path despite its years of austerity.