Towards the end of 1925 and as the drachma steadily lost its value, the government was forced to reduce its payments to the absolutely necessary and seek, unsuccessfully, a new loan from Greek banks. Finally, in January 1926 a new forced loan was decided, which was appropriated for the return of part of the floating public debt to the National Bank and for dealing with public sector needs. Still, the problem of budget balancing remained unsolved.
Analytic data of the revised budgets of 1925-1926 and 1926-1927 (in million drachmae)
|Health (for the refugees)
|Total expenses of ministries
|Servicing of public debt
* The revisions of the 1925-1926 budget were due to the fall of the drachma against the pound, but also to the extraordinary measures for the improvement of ordnance, the construction of roads and for refugee care. (The 1926-1927 budget is presented with the revisions of December 1926.)
Source: FO 371/12178/3697/19, Annual Report 1926, p. 34.
The comparison of the budgets of 1925-26 and 1926-27 shows a retrenchment of expenses in the order of 469 million drachmae, which corresponded to the ministries of National Economy and Health.These ministries ceased to function in the beginning of 1926 and their duties were distributed to the services of other ministries. The sum saved up due to this measure was absorbed by the two war ministries. Expenditure for the army and navy represented 30% of the total expenditure in the budget of 1926-27, against 27% of the previous budget, a fact that engendered strong protests by the International Economic Control. The desperate efforts of the dictatorship to balance the budget until the summer of 1926 by imposing measures of austerity and by dismissing civil servants, intensified the general discontent against the regime. Besides, the increase of taxes by 22,5% did not even cover the 23% drachma devaluation against the pound during that year. At the annual report of 1926 to the Foreign Minister of Great Britain, the new British ambassador in Athens, Sir Percy Lorain noted that the outlook for the near future was more than ever uncertain, because there was a new list of expenses and debts, which would inevitably have to be added to the next budget.