Greek Government Just Weeks From Going Bust

Recession, budget cuts have wiped out tax revenue
By Rob Quinn,  Newser Staff
Posted Jun 6, 2012 4:14 AM CDT
In the central Greek city of Volos, bartering has made a comeback.   (Getty Images)
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(Newser) – Never mind the euro or the drachma, Greece's new currency could become the IOU, the New York Times finds. The country's government is rapidly running out of cash—despite the latest bailout of $161 billion—and it might have no money for salaries, pensions, or fuel imports as early as July. Greek leaders say the budget shortfall is the result of a recession and budget cuts which have caused tax revenues to plummet as taxpaying businesses go broke and others try to stay afloat by dodging their taxes.

The government's revenue is down 25% over the last year, and it has little hope of recovering much of the $55 billiion in back taxes it is owed. "One repercussion of the crisis is that people are harder to find," says an official at Greece's financial crimes investigation unit. "And when you do find them, they don’t have money." He recently visited the island of Naxos with a team of tax inspectors, but a local radio station broadcast his license plate number to warn residents. The caretaker government in place until elections this month is considering either dipping into funds that are meant to recapitalize the country's banks—or issuing IOUs.

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