Canadian CEOs believe that eurozone members and the IMF were right to approve a C110-billion bailout package for Greece, which is set to be distributed over the next three years. In a recent Compas Inc. poll of Canadian business leaders, 75% agreed that this was a good decision.
CEOs also weighed in on the C30 billion of bailout money coming specifically from the IMF, with 71% agreeing with the lending of emergency money to try to prevent Greece from defaulting on its huge debt load. In addition, 54% of CEOs agreed that the IMF is justified in using Canadian money for the bailout – like all IMF members, Canada contributes money to the fund.
But despite Prime Minister George Papandreou’s commitment to Greece’s austerity cuts and “great sacrifices” for the country, CEOs were not confident that Greece’s troubles are over. On a 100-point probability scale, the chance that Greece won’t recover this year and will call for a second bailout scored a mean of 64. “Greece and its population have to get their house in order,” said one respondent. “They cannot continue to pretend to be a rich country without having a tax base to support rich country benefits.”
On the same scale, the likelihood that Greece will be asked to leave the Economic and Monetary Union in the next couple of years scored a mean of just 42. Greece’s adoption of the euro in 2002 made it much easier for the country to borrow money, contributing to the current crisis.
Almost half of the CEOs – 48% – felt that while Greece would face a second emergency, the crisis wouldn’t spread beyond the country’s borders. But 24% of CEOs were less optimistic, saying that the crisis would expand to other countries. “The EU is now paying dearly for allowing Greece and other “weak” countries to join when their economies and politics were not ready,” one respondent said.
When asked which countries were most likely to have future economic crises, business leaders thought Portugal was most at risk, with Spain close behind. Respondents did not think Canada was at risk of emergency, giving it a probability score of just 15 out of 100.