DEBT CRISIS OF

GREECE: LESSONS
FOR STABLE
ECONOMY
 • What is debt crisis?
• The Greek crisis started in late 2009.
Introduction • The European debt crisis is a crisis affecting
several eurozone countries including Greece.
• The eurozone crisis resulted from the
structural problem of the eurozone and a
combination of complex factors,
 • 2009- , Greece announced its budget deficit would be 12.9 percent of
its GDP which is more than four times the EU's 3 percent limit. That
scared off investors and raised the cost of future loans.
• 2010- Greece announced a plan to lower its deficit to 3 percent of
GDP in two years.
• 2011- the European Financial Stability Facility added 190 billion euros
to the bailout.
• 2012- , Bondholders finally agreed to a haircut, exchanging 77 billion
euros in bonds for debt worth 75 percent less.
Timeline • 2014- Greece’s economy appeared to be recovering, as it grew 0.7
percent. The government successfully sold bonds and balanced the
budget.
• 2015- voters elected the Syriza party to fight the hated austerity
measures. On July 15, the Greek parliament passed the austerity
measures despite the referendum.17 Otherwise, it would not receive
the EU loan of 86 billion euros. The ECB agreed with the IMF to
reduce Greece’s debt. Greece made its payment to the ECB, thanks to
a loan of 7 billion euros from the EU emergency fund. 
Debt to GDP
 • 2016- the Bank of Greece predicted the
economy would return to growth by the
summer. It only shrank 0.2 percent in 2015, but
the Greek banks were still losing money.
• In May 2017, Tsipras agreed to cut pensions and
broaden the tax base.22 In return, the EU
loaned Greece another 86 billion euros. Greece
Cont… used it to make more debt payments.
• 2018- the Greek parliament agreed on new
austerity measures to qualify for the next round
of bailouts. On January 22, the eurozone finance
ministers approved 6 billion to 7 billion euros.
• 2020- Greece’s 10-year yield below 1% for the
first time ever.
 • Euro zone
• The current account deficit was not financed
by FDI but by expansion of debt.
Causes • Early retirement
• Tax evasion
• High unemployment
• Benefits to workers
 • Rising youth unemployment.
• Poverty and net household median income.
• People experiencing severe deprivation.
• Severe cut in medical expenses
Impact • Peoples wellbeing
Measures
 • Presently the population of Greece is to be 10.8
million.
• A GDP of $298.7 billion with a growth rate of 1.4 %.
• The unemployment rate is to be 21.5% in the
country.
• Inflation rate at 1.1%.
Current • The country has gone up for a open market .
scenario • Greece’s national debt and its jobless rate are the
highest in the euro zone.
• The country emerged from its third international
bailout last year and fiscal progress is still being
monitored by its euro zone lenders, who project
that the economy will grow by 2.2% in 2020 —
much less than in the draft budget.
 • One should constantly check out for potential
problems when times are good—it doesn’t take
long for market sentiment to change when
problems surface.
• a globally integrated country, with an open
capital account, must ensure that its key
economic information is credible. Sudden and
Learnings large corrections could create problems,
especially when the economic situation is weak.
• one should be careful not to put too rosy a gloss
on the likely outcome of an adjustment
programme.
• the IMF must ensure equity in how it treats
different member countries.