<p>I'd like to read more on "intergovernmental guarantees", but I believe it's something similar to how the US government implemented the bailout. The 2008 stimulus of $700 bn was <em>the right</em> to spend this money over time. So, this amount entered government spending only gradually. (I think that's also what @BKay's quote says.)</p>

<p>But as we found out <a href="https://economics.stackexchange.com/questions/4471/who-exactly-foots-the-bill-if-greece-defaults">here</a>, the troika in fact owns the Greek debt, that is, money had already been spent on buying Greek bonds. So, even if direct payments may be stretched over time due to bilateral settlements, the bond-related payments are in the agreements already and soon could be expected in the books.</p>

<p>Which means, the taxpayer does pay. </p>

CC BY-SA 3.0
2015-07-07T10:22:22.597Z
but if the money given for the bailout is not coming from the states' internal budgets as mentioned below, that means that the taxpayer does not pay. I am a bit confused.
Marion
CC BY-SA 3.0
2015-07-07T12:10:11.653Z
@Marion This money is spent by an entity (like EFSF) that will demand to pay later. That is, payments by countries may be scheduled for later, so yet not appear in the budget.
Anton Tarasenko
CC BY-SA 3.0
2015-07-07T12:23:17.767Z
EFSF is not funded, as you say, by state budgets but from integovernmental guaranties/securities that those money will be paid. If, say, Finland, publics a 10 year bond to lend EFSF this is obviously not money that are taken from taxpayers. On the contrary, taxpayers, more specifically state budgets are getting money from direct interest payments made by the Greek government (or other program country). Do you think I am wrong in some of my statements? (btw thanks for answering)
Marion
CC BY-SA 3.0
2015-07-07T13:45:30.377Z
@Marion Until contracts are honored, I just don't see a substantial difference between the agreement to pay the money to the EFSF (guarantee) and the actual process of transferring the money from A's national budget to B's national budget.
Anton Tarasenko
CC BY-SA 3.0
2015-07-07T15:41:06.083Z
dut I do not see why would a country A transfer money out of its budget to a country B if the case is that the money transferred are either existing non-used funds or money gotten from bonds, or intergovernmental guarantees.
Marion
CC BY-SA 3.0
2015-07-07T17:31:47.953Z
@Marion The things you listed are real expenditures, which do appear in the budget one way or another. It's actually a problem that government account for them poorly. See e.g. Lawrence Kotlifoff on budget liabilities.
Anton Tarasenko
CC BY-SA 3.0
2015-07-07T23:53:02.700Z
@ AntonTarasenko I am not convinced these stuff appear in the state budgets as you say. Or if all of them do. But, considering the fact that interests are paid directly to the state budgets from countries within programs I would say it is obvious that in this level tax payers get benefited and not paying to the program countries. Correct me if wrong.
Marion
CC BY-SA 3.0
2015-07-06T19:46:06.067Z
2015-07-06T19:46:06.067Z
2017-04-13T12:51:38.253Z
Anton Tarasenko
<p>I don't know of a full accounting in the Eurozone but Measuring the True Cost of Government Bailout (<a href="http://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1027&amp;context=law_lawreview" rel="nofollow">Block (2010)</a>) provides a look at the on- and off-budget costs of the bailouts in the United States and finds they were substantially off-budget. </p>

<blockquote>
  <p>Government intervention to assist individual businesses and industries
  during the 2008–2009 economic crisis was extraordinary in variety and
  scope. Despite official protestations of "no more bailout" in the
  Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010,
  future government interventions are inevitable, should economic
  circumstances become sufficiently dire. Moreover, even if Congress
  eliminates overt bailout-type interventions, indirect forms of public
  bailout are likely to continue. Understandably, taxpayers have been
  concerned about the cost. A simple tally of dollars authorized or
  disbursed is wholly inadequate to accurately assess the costs of
  various interventions. <strong>This Article addresses the challenges of
  providing reasonable budgetary information with respect to different
  types of bailout expenditures. In addition to looking at costs for the
  more obvious bailout programs, the analysis explores the special cost
  estimation challenges for other more covert actions, such as special
  tax breaks or relief from burdensome regulation, that serve a
  "bailout" function. The Article also takes issue with the
  fragmentation of intervention efforts among different "on-budget" and
  "off-budget" entities and with some of the methodologies used by the
  government to value assets obtained in its bailout efforts, arguing
  that decision making about the appropriate allocation of aggregate
  resources is hampered when some expenditures are "off-budget"
  altogether and when even "on-budget" agencies use different accounting
  methods.</strong> Finally, the Article calls for transparency and budget
  accounting for public bailouts accomplished more indirectly through
  the tax system and other regulatory regimes. Adequate and transparent
  budget accounting for bailout costs requires greater consistency in
  valuation and accounting methods, and a more unified presentation of
  aggregate information in the budget with respect to all government
  bailout-type activities.</p>
</blockquote>

<p>Pages 23-25 explain what she means by off-budget and it takes her 3 pages to say exactly what she means, but approximately "on-budget" means upfront costs that appear on the government's budget while "off-budget" is everything else, including the value of contingent liabilities and expenditures by entities in the control of the US government but for whatever reason do not have accounts fully consolidated into the budget. </p>

CC BY-SA 3.0
2015-07-06T19:16:21.197Z
off-budget mean they did not take money from tax-payers contributions. Right?
Marion
CC BY-SA 3.0
2015-07-06T14:21:13.560Z
2015-07-10T18:22:33.737Z
2015-07-10T18:22:33.737Z
BKay
<p>A lot of people (mainly journalists and politicians) say that Eurozone taxpayers pay for the Greek bailouts. On the other hand, a lot of economists say that those money have not been added in the yearly state budgets of the Eurozone members because they are not physical money coming from the tax payers. </p>

<p>Contrary, most of the Greek bailout funds are given in the form of intergovernmental guarantees for which Greece pays actual real interests. Additionally, the bailouts not being bond-like give the creditors as the Eurozone countries the right to ask back the value of these guarantees whenever they like.</p>

<p>Can someone objectively clarify the situation? Specifically, can you give some details on the form of these intergovernmental guarantees? </p>

<debt><government-debt><financial-crises><accounting><national-accounts>
Have the Greek bailouts been included in state budgets Eurozone members?
Marion
# Have the Greek bailouts been included in state budgets Eurozone members?

(Asked by: username_0 on 2015-07-06)

A lot of people (mainly journalists and politicians) say that Eurozone taxpayers pay for the Greek bailouts. On the other hand, a lot of economists say that those money have not been added in the yearly state budgets of the Eurozone members because they are not physical money coming from the tax payers.

Contrary, most of the Greek bailout funds are given in the form of intergovernmental guarantees for which Greece pays actual real interests. Additionally, the bailouts not being bond-like give the creditors as the Eurozone countries the right to ask back the value of these guarantees whenever they like.

Can someone objectively clarify the situation? Specifically, can you give some details on the form of these intergovernmental guarantees?

**Tags:** debt, government-debt, financial-crises, accounting, national-accounts

---

## 2 answers

### Answer by username_1 on 2015-07-06. Score: 1

I'd like to read more on "intergovernmental guarantees", but I believe it's something similar to how the US government implemented the bailout. The 2008 stimulus of $700 bn was *the right* to spend this money over time. So, this amount entered government spending only gradually. (I think that's also what @BKay's quote says.)

But as we found out [here](https://economics.stackexchange.com/questions/4471/who-exactly-foots-the-bill-if-greece-defaults), the troika in fact owns the Greek debt, that is, money had already been spent on buying Greek bonds. So, even if direct payments may be stretched over time due to bilateral settlements, the bond-related payments are in the agreements already and soon could be expected in the books.

Which means, the taxpayer does pay.

> **Comments:**
> **username_0**: but if the money given for the bailout is not coming from the states' internal budgets as mentioned below, that means that the taxpayer does not pay. I am a bit confused.  
> **username_1**: @Marion This money is spent by an entity (like EFSF) that will demand to pay later. That is, payments by countries may be scheduled for later, so yet not appear in the budget.  
> **username_0**: EFSF is not funded, as you say, by state budgets but from integovernmental guaranties/securities that those money will be paid. If, say, Finland, publics a 10 year bond to lend EFSF this is obviously not money that are taken from taxpayers. On the contrary, taxpayers, more specifically state budgets are getting money from direct interest payments made by the Greek government (or other program country). Do you think I am wrong in some of my statements? (btw thanks for answering)  
> **username_1**: @Marion Until contracts are honored, I just don't see a substantial difference between the agreement to pay the money to the EFSF (guarantee) and the actual process of transferring the money from A's national budget to B's national budget.  
> **username_0**: dut I do not see why would a country A transfer money out of its budget to a country B if the case is that the money transferred are either existing non-used funds or money gotten from bonds, or intergovernmental guarantees.  
> **username_1**: @Marion The things you listed are real expenditures, which do appear in the budget one way or another. It's actually a problem that government account for them poorly. See e.g. Lawrence Kotlifoff on budget liabilities.  
> **username_0**: @ AntonTarasenko I am not convinced these stuff appear in the state budgets as you say. Or if all of them do. But, considering the fact that interests are paid directly to the state budgets from countries within programs I would say it is obvious that in this level tax payers get benefited and not paying to the program countries. Correct me if wrong.  

---

### Answer by username_2 on 2015-07-06. Score: 1

I don't know of a full accounting in the Eurozone but Measuring the True Cost of Government Bailout ([Block (2010)](http://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1027&context=law_lawreview)) provides a look at the on- and off-budget costs of the bailouts in the United States and finds they were substantially off-budget.

> Government intervention to assist individual businesses and industries
> during the 2008–2009 economic crisis was extraordinary in variety and
> scope. Despite official protestations of "no more bailout" in the
> Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010,
> future government interventions are inevitable, should economic
> circumstances become sufficiently dire. Moreover, even if Congress
> eliminates overt bailout-type interventions, indirect forms of public
> bailout are likely to continue. Understandably, taxpayers have been
> concerned about the cost. A simple tally of dollars authorized or
> disbursed is wholly inadequate to accurately assess the costs of
> various interventions. **This Article addresses the challenges of
> providing reasonable budgetary information with respect to different
> types of bailout expenditures. In addition to looking at costs for the
> more obvious bailout programs, the analysis explores the special cost
> estimation challenges for other more covert actions, such as special
> tax breaks or relief from burdensome regulation, that serve a
> "bailout" function. The Article also takes issue with the
> fragmentation of intervention efforts among different "on-budget" and
> "off-budget" entities and with some of the methodologies used by the
> government to value assets obtained in its bailout efforts, arguing
> that decision making about the appropriate allocation of aggregate
> resources is hampered when some expenditures are "off-budget"
> altogether and when even "on-budget" agencies use different accounting
> methods.** Finally, the Article calls for transparency and budget
> accounting for public bailouts accomplished more indirectly through
> the tax system and other regulatory regimes. Adequate and transparent
> budget accounting for bailout costs requires greater consistency in
> valuation and accounting methods, and a more unified presentation of
> aggregate information in the budget with respect to all government
> bailout-type activities.

Pages 23-25 explain what she means by off-budget and it takes her 3 pages to say exactly what she means, but approximately "on-budget" means upfront costs that appear on the government's budget while "off-budget" is everything else, including the value of contingent liabilities and expenditures by entities in the control of the US government but for whatever reason do not have accounts fully consolidated into the budget.

> **Comments:**
> **username_0**: off-budget mean they did not take money from tax-payers contributions. Right?  

---

