The Greek government-debt crisis (also known as the Greek depression) started in late 2009. It was the first of five sovereign debt crises in the euro-zone – later referred to collectively as the European debt crisis. The 1999 introduction of the euro as a common currency reduced trade costs among the Eurozone countries, increasing overall trade volume. However, labor costs increased more in peripheral countries such as Germany, making Greek exports less competitive. As a result, Greece saw its current account (trade) deficit rise significantly. Causes:  Government spending Current account balance  Tax evasion  Misreported debt statistics SOLUTIONS IMPLEMENTED:  First Economic Adjustment Programme for Greece (May 2010 – June 2011)  Second Economic Adjustment Programme for Greece (July 2011 – present) RECOMMENDATION TO THE CRISIS:  Exit the Eurozone or "Grexit"  Digital currency cards  Negotiate another bailout  European debt conference

1. “Greek Government Debt Crisis”

2. K.J.SOMAIYA COLLEGE OF SCIENCE AND COMMERCE
(Re-accredited “A” Grade by NAAC with CGPA 3.21)
Autonomous
Pankti R. Thakar
Seat no. 15-8548
SYBMS
Roll no. 47
BASIS OF FINANCIAL STUDIES
Option B
Mentor- Bhavna Patil Ma’am

3. Introduction
• The Greek government-debt
crisis started in late 2009.
• Introduction of the euro as a common
currency reduced trade costs among
the Eurozone countries.
• Greece’s membership in the EU.
• Great Recession that began in the U.S.
in 2007–2009, spread to Europe.
• Rising unemployment.

4. Causes
• Government spending
• Current account balance
• Tax evasion
• Misreported debt statistics
• Debt levels revealed (2010)

5. Chronology

6. Bifurcation of borrowings

7. Economic effects
• GDP fell from €242 billion in 2008 to €179 billion in
2014, a 26% decline overall.
• Per capita fell from a peak of €22,500 in 2007 to
€17,000 in 2014.
• The annual budget deficit (expenses over revenues)
was 3.4% GDP in 2014.
• Revenues for 2014 were €86 billion (about 48%
GDP), while expenditures were €89.5 billion (about
50% GDP).

8. Contd.
• Interest rates on Greek long-term debt rose from
around 6% in 2014 to 10% in 2015.
• The unemployment rate has risen considerably,
from below 10% (2005–2009) to around 25%
(2014–2015).
• An estimated 44% of Greeks lived below the poverty
line in 2014.

9. Solutions Implemented
 First Economic Adjustment Programme for Greece (May 2010 –
June 2011)
• On 1 May 2010, the Greek government announced a series of
austerity measures to persuade Germany, the last remaining
holdout, to sign on to a larger EU/IMF loan package.
• The next day the euro-zone countries and the International
Monetary Fund agreed to a three-year €110 billion loan retaining
relatively high interest rates of 5.5%, conditional on the
implementation of austerity measures.
• New extra fourth package with austerity measures was approved
on 29 June 2011, with 155 out of 300 members of parliament
voting in favor.
•

10. contd.
Second Economic Adjustment Programme for
Greece (July 2011 – present)
• Euro area leaders agreed to extend Greek loan
repayment periods from 7 years to a minimum of 15
years and to cut interest rates to 3.5%.
• a new €109 billion support package.
• an agreement with banks to accept a 50% write-off
of (some part of) Greek debt.

11. Recommendation to the crisis
• Exit the Eurozone or "Grexit"
• Negotiate another bailout
• Digital currency cards
• European debt conference

12. Bibliography
• Wikipedia
• The Economic Times
• The New York Times
• The Hindu
• Financial times
• Opspeaker.com/blog

13. • Thank you!