The EU-Turkey migrant deal could cost bankrupt Greece a staggering €4 billion this year alone — two per cent of their gross domestic product (GDP) — at a critical point in their financial bail out, HSBC has warned.
The estimated €4 billion burden is far more that the €700 million in aid promised by the European Union (EU), and the bank also pointed out Greece is required to repay a massive €3 billion of its debt this June.
“The closure of the Western Balkans route means there are now almost 50,000 refugees stuck at the Greek border. This adds to the fiscal costs for the government,” economist Fabio Balboni of HSBC warned in a note, seen by the International Business Times, adding: “A deal was struck on March 18 between the EU and Turkey to send the refugees back to Turkey, but implementation could take time, and it is uncertain whether it will be enough to stem the influx of migrants.”
“The implementation of the agreement will require huge operational efforts from all involved, and most of all from Greece.” the European Commission itself warned on March 19 in a statement on its website as the deal was finalised.
The HSBC economist also explained how Greece has reached a critical point in its bailout programme.
This summer, huge payments are due to both the International Monetary Fund (IMF) and the European Central Bank (ECB) totaling more than €3 billion, at precisely the time when the migrant flow from Turkey will be at its highest due to warm weather.
“Tensions could reach a peak by the summer, when Greece has to repay some €3 billion in debt and interest to the ECB (July 20), and when last year the influx of migrants was at its highest,” Mr. Balboni writes.
The cost of processing and deporting each migrant could be €13,000, he said, and billions will be needed this year. However, the Greek Central Bank governor previously said the total costs will be just €600 million this year, and the EU has only offered €700 million in aid.
Mr Balboni explained: “German government estimates suggest that each refugee in Germany requires support of around €13,000 a year.
“If arrivals continue at the current rate and the Western Balkans route remains closed, the costs for the Greek government could reach €4 billion (two per cent of GDP) per year by the summer, much higher than [the Greek Central Bank governor’s] initial estimate.”