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SOVEREIGN DEBTS

PREPARED BY :-Makarand Takale Vipul Bali Deepak Sachan

OUTLINE

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Objective Introduction

Analysis ---- Greece ---- Republic of Portugal Click to---- Irelandsubtitle style edit Master ---- Spain

Macroeconomic indicators for debt crisis Recommendations

To study the sovereign debt crisis of PIGS To analyze the macroeconomic indicators for crisis Data like Government budget, public debt & current account balance are analyzed with the help of MS-Excel

OBJECTIV ES

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INTRODUCT What is Sovereign Debt ? ION & sovereign state to It is the failure of the Govt.

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repay its debt in full. In this study we have taken the case of PIGS countries and how they are under sovereign debt due to a mix of domestic and international factors

Click to edit Master subtitle style Factors Responsible

Domestically, high Govt. spending , structural rigidities, tax evasion and corruption have all contributed to countries accumulation of debt over the past decade Internationally, the adoption of Euro & lax enforcement of EU rules aimed at limiting the

Public debt as percentage of GDP = (Govt. debt / Nominal GDP) * to edit Click 100 Master subtitle style

MACROECONOMICS INDICATORS ANALYZED

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Govt. Debt as a percentage of GDP Current Account balance

Budget deficit

GREE CE

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Introduction of Euro Late 2000s financial crisis Transaction arrangements with Goldman Sachs (Creative Accounting)

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High Govt. spending Tax evasion Mismanagement of funds Adoption of Euro Incapability to recover Click to edit Master subtitle style situation

REPUBLIC OF PORTUGAL

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IRELA ND

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Property bubble 32% of GDP as help to banks 85 billion bailout agreement

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SPA IN

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Weak economic growth Import of Oil Property bubble Late 2000 financial crisis Inflation subtitle Click to edit Master rate style

Govt. Budget as The budget deficit of GDP high %age is due to the
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spending of the governments of these countries

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Current Account as A large contraction of oftrade deficit and %age inthe income account deficit GDP secondly a decrease the
increased the current account deficit
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Public Debt as %age PIGS funded budget deficits by borrowing from of GDP international markets leaving it with a chronically high
external debts. Both budget deficits and external debts level is well above those permitted by the rules governing the EUs Economic & Monetary Union 12
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GDP in US After 2008, with the financial crisis , sluggish domestic billion $ demand and low international competitiveness of the goods
produced, these countries witnessed a contraction in GDP
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Share of Financial, Non-Financial and Government sectors in key aggregates

Share of sectors in key aggregates
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5/5/12 utions of expenditure components to the growth of nominal GDP in the

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5/5/12 Gross Profit share of Non Financial corporations

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Net acquisition of financial assets of nonfinancial corporations in the euro area

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Net acquisition of financial assets of financial corporations in the euro area

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Net incurrence of loans and net lending (+) / net borrowing (-) of non-financial corporations in the euro area
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RECOMMENDAT Austerity accompanied with further liberalization IONS

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Fiscal consolidation measures to reduce Govt. spending and increase taxes

Radical exit from the Eurozone

There would be devaluation followed by cessation of payments and restructuring of debts

Increasing Master subtitle Goods Click to editcompetitiveness of style produced

In order to boost the competitiveness of PIGS industries and reduce their current account deficit, these industries need to increase their productivity , significantly cut wages and increase savings