Health of nation suffers as medical supplies dwindle
Greek austerity has slashed hospital budgets by almost 50pc
Greece is the prescription drug capital of Europe. A short walk along an Athens street reveals the green cross of a pharmacist jutting out from the sides of myriad premises.
For every 100,000 Greek inhabitants, there are nearly 98 pharmacists at their disposal, the highest ratio in the EU. By comparison, there are only 21 in the UK and 56 in nearest EU rival Bulgaria.
The ubiquity of high-street pharmacies belies the dangerous truth about the country's broken health care sector: basic medical supplies are frighteningly close to running out.
In an economy where the "butcher's knife" of austerity has been wielded across all areas of the public sector, health care has been gutted more savagely than most.
Greece's hospital budget has been slashed by nearly 50pc since the country was thrown into euro-turmoil. Spending on hospitals has fallen from 6.3pc to 3.9pc of GDP between 2008-2015.
The brunt of the austerity cuts has been borne by the provision of medical services and supplies. Greece's 140 state hospitals saw a 94pc fall in their budget in the first four months of the year.
It's a cash crisis which could have cataclysmic implications for the country's fate outside of the eurozone.
Greece imports almost all of its medicines. After energy, drugs make up the second largest import spend, amounting to 5.5pc of total goods. In the event that Greece is forced out of the monetary union, the cost of supplies would soar under a dramatically undervalued drachma.
This reliance on foreign drugmakers has led Germany's top EU commissioner to warn Brussels to prepare for a "state of emergency" if it defaults on June 30.
Debts to international drugs companies are mounting. Public-sector hospitals and insurance companies have racked up debts of more than €1.1bn to foreign pharmaceutical companies since December 2014.
The liquidity crunch has a dangerous precedent. At the height of its debt woes in 2010, the then-Greek government resorted to issuing a form of domestic bonds to medical suppliers in the absence of cash.
These "pharma-bonds", as they were known, acted as IOUs from the government and resembled a form of "quasi-drachmas", according to economists at UBS. The zero-coupon bonds behaved much like a traded currency and could be deposited at banks as collateral for cash.
Such a move to settle debts with suppliers is not unique. Similar examples abound in crisis-hit Argentina in the early 2000s and cash-strapped California in 2009.
"Paying suppliers in IOUs is fine if it's done over a very short period," says Justin Knight, at UBS. "It is also fine if you know you have a whole lot of cash coming, like California did."
But recourse to such measures today, when the government has promised to default on the IMF if it can't strike a deal before the end of June, could put Greece on to the dangerous path of issuing an alternative currency when its eurozone membership hangs by a thread.
"The trouble with IOUs is that you're issuing a currency, and a Greek IOU won't have the same value as a euro," says Mr Knight. "If they are used to pay wages or suppliers, then you soon get into trouble. When people go out and want to use the IOUs to buy bread, you end up with a de facto devaluation."
With arrears once again stacking up, and the prospect of a release of bail-out funds before June 30 rapidly diminishing, a resort to some form of quasi money-printing may not be far off. In the words of UBS, taking recourse to such measures happens especially when a government in a monetary union "cannot print money to fund its deficit". (©Daily Telegraph, London)