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Ireland, Portugal, Spain and Cyprus: other EU bailouts

Greece is one of five EU countries needing a bailout in recent years
AFP

Paris (AFP) – The bailout of Greece, where eurozone ministers have declared a severe debt crisis to be over, is the biggest, but not the only, financial rescue of a European Union country.

Four other members states have received massive international bailouts rescuing their economies. 

– Ireland: 85 billion euros –

In 2010 the one-time “Celtic Tiger” became the second eurozone state, after Greece, to obtain aid from the European Union and the International Monetary Fund after a property market crash and banking crisis brought its economy to near collapse.

The crisis arose after house prices quadrupled from 1996 to 2006, and then collapsed by nearly half, with buyers unable to reimburse the banks.

The government could not rescue the banking sector and sought international help, obtaining a bailout of 85 billion euros ($113 billion at the time) that included 67.5 billion euros from the EU and IMF.

In exchange it imposed draconian austerity measures of spending cuts and tax hikes.

By late 2013 Ireland was able to exit the rescue programme; in late 2017 it made an early repayment of its remaining bailout loan to the IMF.

– Portugal: 78 billion euros –

On the verge of defaulting on its mountain of debt after decades of ballooning wages and state spending, Lisbon secured a bailout from the EU and IMF of 78 billion euros ($116 billion at the time) in May 2011.

In exchange it agreed to a programme of reforms that included slashing public spending, imposing tax hikes and pension and unemployment benefit cuts, and slashing more than 78,000 public sector jobs.

It was able to exit the programme in May 2014, having sharply cut its budget deficit from close to 10 percent of GDP in 2010 to 2.0 percent in 2016, below the 3.0 percent ceiling fixed by European budget rules.

The banking sector remains fragile, having been rescued in 2014 and 2015, while gross government debt remains high at around 125 percent of GDP.

– Spain: 41 billion for the banks –

In June 2012 Spain looked as if it too would need a rescue because the collapse of its banking system — largely down to a burst property bubble in 2008 — had plunged its economy into a five-year, double-dip recession that destroyed millions of jobs.

Madrid insisted it was able to get by without a full rescue, seeking instead a European Union credit line of 100 billion euros ($129 billion at the time) to help the banks, and in the end using only about 41 billion euros.

In exchange Spain agreed to create a so-called bad bank which took over billions of euros in toxic assets from the restructured lenders at heavily reduced prices. 

The rescue programme ended in December 2013 and Spain now has renewed economic growth while pledging to keep the public deficit at around 2.2 percent this year.

– Cyprus: 10 billion euros –

Cyprus’ banks were badly exposed to their failed peers in Greece and in March 2013, to avoid economic collapse, the government secured a 10-billion-euro ($13 billion at the time) bailout from the European Commission, European Central Bank and the IMF.

In return it slashed wages and increased consumer taxes, agreeing to wind down its second-largest bank among other measures.

The island exited the bailout in March 2016 without needing the last tranche of 2.7 billion euros.

Cyprus was able to reboot its economy in under four years, aided by growth in its vital tourism industry, and it is now one of the fastest growing economies in Europe.

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