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The Greek Debt Crisis Debt Summary in Late 2009 the Greek Government Admitted to Having Debts of Over !300 Billion and a Large Budget Deficit

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The Greek Debt Crisis Debt Summary in Late 2009 the Greek Government Admitted to Having Debts of Over !300 Billion and a Large Budget Deficit The Greek Debt Crisis Debt Summary In late 2009 the Greek government admitted to having debts of over !300 billion and a large budget deficit. In an attempt to stabilise this dangerous situation, Greece has since received two bailout loan packages from fellow Eurozone states and the IMF. However, these have been contingent upon the Greek government undertaking tough austerity measures, which has consequently led to large-scale suffering throughout the Factfile country. Population Where Did The Debt Come From? 10,775,557 Joining the Eurozone was initially hugely beneficial for the Greek economy; GDP grew at unprecedented rates and government borrowing costs became very low. Instead of Life expectancy using such positive circumstances to pay off already high existing debt, however, the Greek government chose to borrow increasingly large amounts for military spending 80.7 years and expand the public sector. In addition, the many structural weaknesses of the Greek economy further exacerbated the debt problem. Tax evasion and corruption 53.1% were rife, so expected government revenue often did not match reality. Government Youth spending also had very little oversight so budgetary compliance was frequently unemployment rate ignored. These multiple factors created an ever-increasing budget deficit. For years Greece actually tried to cover up this debt burden in an attempt to remain a viable member of the Eurozone. However, the hidden borrowings were revealed soon after 44% the global financial crisis of the late 2000s, where a sudden lack of growth made Greek of the population debts entirely unsustainable. Ill-prepared to cope with the dire situation it found itself now have an income in, Greece plummeted towards a potential default. below the poverty line The Reponse of the International Community A Greek default was strongly discouraged because of what it could mean for the wider 200% Eurozone – much of Greece's debts were held by French and German banks so the rise in people ramifications would have been felt across the continent. As a result, Greece was infected with HIV encouraged to accept a !110 billion bailout loan in 2010 from fellow Eurozone since crisis began countries and the IMF to help pay its debts. Backed into a corner, Greece had to accept high interest rates and instigate a very tough austerity package before it could receive any part of the loan. Despite such measures, the 'rescue package' did little to help the 175.1% Greek economy. Instead, a second bailout loan was arranged in 2012 on the condition Greek debt as a that Greece undertook even further austerity and privatisation efforts, and negotiated percentage of GDP a reduction in what it owed to private holders of government bonds. Economists now argue that Greece may actually need yet another bailout loan in the future to boost its The Greek economy economy. The need for more and more loans suggests that austerity-based solutions has shrunk by have so far been largely ineffective at helping stabilise the economy – a less draconian almost approach must be sought. 24% in the last 6 years Costs to the Greek People Due to the tough austerity requirements there have been mass redundancies in the For more public sector, and significant wage decreases for those that remain. The situation has information and become increasingly dangerous with the newly unemployed now seeing very little resources, visit: protection from social services, which are also being dramatically scaled back. The healthcare system, for example, has been reduced by over 40% with many vital http://www.church medicines no longer stocked. The human consequences of the austerity cuts are clear, ofscotland.org.uk/ with rates of suicide, HIV, and poverty all having increased substantially in the last 5 serve/mission_world wide/get_involved years. At the same time tax rates have increased, and hundreds of thousands of people now accept church handouts and attend soup kitchens in order to simply survive. The or 'rescue package' given to Greece has caused nothing but suffering for the majority of Greeks. Whilst it is the politicians and elites who are most to blame for the debt crisis, http://www.jubilee austerity hurts nobody but the vulnerable. scotland.org.uk TIMELINE OF THE GREEK DEBT CRISIS 2001 - January – Greece Becomes a Member of Eurozone Greece officially joins the Euro, with Prime Minister Costas Simitis exclaiming that "We all know that our inclusion in EMU (European Monetary Union) ensures for us greater stability and opens up new horizons." 2004 – August – Athens Hosts Olympic Games Greece hosts the Summer Olympics at a cost of around $11 billion. With a number of venues having since been left to ruin, the Games are said to epitomise the corrupt, inefficient nature of public spending in Greece. 2008 – December – European Leaders Aim To Combat Global Financial Crisis With the Global Financial Crisis causing panic across Europe, EU leaders agree to create a !200 billion stimulus plan to help boost growth. European Commission president Jose Manuel Barroso said this plan is "the best way to restore citizens' confidence and counter fears of a long and deep recession." 2009 – October – George Papandreou Becomes New Greek Prime Minister George Papandreou and his Socialist PASOK Party win a snap general election, with voters showing discontent at corruption allegations of the previous government. After the results are announced, Papandreou exclaims "I will always be upfront with the Greek people, so we can solve the country's problems together." 2009 – December – New Government Reveals True National Debt Burden The Papandreou government reveal the true extent of the debt burden on the Greek economy to be over $300 billion. They believe that previous goverments had been massaging the figures to avoid condemnation from the Eurozone. On hearing the news, credit rating agencies begin to downgrade Greek government debt. 2010 – May – Bailout Package is Negotiated to Rescue Greece With Greece struggling to curb its deficit on its own, a !110 billion bailout package is agreed by the IMF and key European Union institutions. In an attempt to reduce the deficit, Greece has already begun large austerity cuts which led to violent protests across the country. Papandreou insists that “with our decision today our citizens will have to make great sacrifices," but "our national red line is to avoid bankruptcy". 2011 – June – Greek Economy Needs Further Assistance Credit rating agency Standard & Poor downgrades Greece's credit rating to the lowest possible, as talk of a default gather pace. The Greek government initiates further budget cuts in an attempt to appease the doubts of the so-called 'Troika' (the IMF, European Commission, and European Central Bank) on its fiscal future. 2011 – July – Second Bailout Package Is Agreed A further bailout package is agreed in an attempt to bolster the Greek economy before it undermines the entire Eurozone. As part of the agreement Greece must undertake even further austerity and privatisation efforts, and attempt to restructure its existing loans with more generous terms. 2011 – September – Discontent at European Leadership Greek Finance Minister Evangelos Venizelos believes that Greece is being unfairly treated: “we should not be the scapegoat or the easy excuse that will be used by European and international institutions in order to hide their own lack of competence to manage the crisis”. A similar sentiment is shown by IMF economist, Olivier Blanchard, who insists that more must be done: "There is a wide perception that policymakers are one step behind the action. Europe must get its act together." 2011 – November – Papandreou Resigns as Prime Minister With anti-austerity strikes continuing across Greece, Papandreou attempts to call for a referendum on the latest bailout plan. However, this causes revolt in his own party as well as condemnation from opposition leaders. He subsequently resigns and a caretaker coalition takes over until elections can take place. 2012 – February – Parliament Passes Austerity Bill Amid continuing unrest, the Greek parliament eventually passes a bill designed to meet the demands of the Troika. This effectively gives the green light for the country to obtain funds from the second bailout package. 2012 – April – Pensioner Commits Suicide Outside Parliament A pensioner commits suicide outside of the Greek Parliament building, and becomes a rallying cry for anti-austerity protestors. His alleged suicide note proclaimed: "The government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state. And since my advanced age does not allow me a way of dynamically reacting... I see no other solution than this dignified end to my life, so I don't find myself fishing through garbage cans for my sustenance." 2012 – May/June – General Election Chaos Pro-bailout parties see a backlash in May elections as parties that promise to rip up the unpopular loan agreements with the Troika make large-scale gains. However, with many of these parties possessing vastly different ideologies no coalition can be formed, and further elections take place in June. Antonis Samaras of the New Democracy party becomes Prime Minister, promising to continue Greece on its austerity-led path. 2013 – June – IMF Admits Faults in Greek Bailouts As the Greek economy continues to struggle, a leaked IMF report admits to not fully appreciating the negative impact the austerity measures would have on the population. Furthermore, the report indicates that the first bailout was not designed to help the Greek economy, but rather “gave the euro area time to build a firewall to protect other vulnerable members and averted potentially severe effects on the global economy”. 2013 – June/July – Public Spending Cuts Continue With the Greek economy continuing to be extremely fragile, Antonis Samaras and his coalition cabinet see no other option but to continue public spending cuts.
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