Professional Documents
Culture Documents
24.Gunjan Kumar
29.Manisha Kumari
36.Raj Babu Kumar
45. Sony Marandi
1
CONTENT
• Conclusion
2
INTRODUCTION TO GREECE
• Capital – Athens
• Main sector with greater contribution to GDP is service sector (80 percent
mainly tourism)
3
REASON FOR GREECE CRISIS
• The ECB was empowered to make only monetary policies
• Interest rates for loans to smaller European countries reduced to less than 5%
from 20%
4
• Reasons
– Excessive expenditure
– Mismanagement
– Rising unemployment
– Tax evasion
– Corruption
5
Greece’s G.D.P. and Unemployment Rates in Europe
Source: Eurostat
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Too many people depend for their livelihood on the too few who work 7
8
IMPACT OF US SUBPRIME CRISIS ON
GREECE
• Acute credit crisis, and borrowing stopped
• Greece’s credit rating downgraded by leading rating agencies to BBB+
• Greece couldn’t borrow anymore, couldn’t repay its debts
• magnitude of the Greek debt: 175% of the country’s GDP
• spike in unemployment, a crisis of confidence, decrease in foreign investment, and
political uncertainty
• budget deficits became unsustainable
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IMPACT ON MAJOR EUROPEAN
ECONOMIES
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PROBLEM FOR GREECE
• Euro is the major problem for Greece, as it cannot devalue its currency
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MEASURES
• The European union, the IMF and the ECB set up a tripartite committee (The
TROIKA) to prepare an appropriate programme
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• Again Euro zone provided loan - July 2011 €109 billion
• ECB started buying government bond from secondary market to reduce bond spread and
to increase the confidence of the investors
– Between May 2010 to June 2011 ECB purchased €78 billion bonds, out of which €45
billion from Greece government
• EU also made a proposal to make a single authority responsible for tax policy and govt.
spending
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AUSTERITY MEASURES
• Increase in VAT as 23% goods and services,11% on food and 5.5% on stationary
• Average age of retirement for public sector employee had increased from 61 to 65
14
Banking issues.. Ever since December 2010,
depositors have been shifting Euros
from Greek banks to banks
elsewhere in the Eurozone, notably
Germany
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CONCLUSION
• Due to over public expenditure and over borrowed. Greece was at the verge of default.
• Greece govt. has taken tight austerity measures to bring down budget deficit to 0.9% of
GDP by 2015. But due to excessive expenditure cut and unemployment, the disposal
income(saving) of public will be reduced.
• The EU, IMF, ECB lending to Greece to solve the underlying problem. But the
maximum money is spent for repayment of debt not for productive use.
• Though they are pumping money in Greece, they are not sure for the future of Greece
economy.
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