This is already the fifth year of recession, according to a report by the central bank, which was made available to dpa on monday. At the end of 2012, greece will have lost almost one-fifth of its economic output over the past five years. The greek economy had slumped by almost 7 percent in 2011.
Unemployment is also expected to rise further, reaching a record 22 percent this year. The country could only emerge from the crisis if it adheres to the reform and austerity program, the report says.
Meanwhile, the eurozone's bailout fund for ailing eurozone countries, the EFSF, transferred 5.9 billion euros to the crisis-hit country on monday. This was reported by the funds' circles in luxembourg. This was the first time the crisis fund made payments to athens. Aid under the first aid program was based on bilateral loans from euro partners.
Last week, the eurozone countries reached final agreement on the second greece package worth 130 billion euros. The international monetary fund (IMF) will contribute 28 billion euros. Athens urgently needs money, as bonds worth 14.5 billion euros are already due on tuesday.
Banks, insurers and other private investors can deduct their losses from the greek debt cut for tax purposes and thus print their levies to the treasury. This emerges from a clarification issued by the federal ministry of finance on monday. Accordingly, the exchange of greek bonds is to be treated as an "enchantment and acquisition" for tax purposes. Many banks had already written down athens securities on their balance sheets. Retail investors who held hellas debt securities in their private portfolios can only offset losses from the exchange against other income from capital assets, it was stressed.
Investors with credit default swaps on greek bonds can largely hold themselves harmless. On average, 78.5 percent of the nominal value of the securities is to be refunded, as the derivatives association ISDA announced on monday. A total of around 2.5 billion US dollars was paid to investors who had hedged against or speculated on a greek default with credit default swaps (CDS).
Market observers reacted with relief to the decision after the debt cut for athens: "it ensures that CDS will continue as a functioning hedging instrument," said elisabeth afseth, analyst at investec bank in london. This is important for investors, because there are still considerable risks in europe with sovereign debtors.
ISDA had determined the so-called "credit event" that triggers the CDS after the greek debt cut. Athens had forced some of its creditors to waive their claims with debt rescheduling clauses. This step had been judged by the responsible ISDA committee as a payment default.
The ISDA, which brings together the major issuers and traders of credit derivatives, determined the residual value of greek bonds ("recovery rate") to be 21.5 percent through a standardized auction procedure. The amount of compensation paid to CDS investors is the difference between the nominal value of the bonds (100 percent) and the residual value.