Greek government-debt crisis

economic crisis

The Greek government-debt crisis happened after the financial crisis of 2007–08. In Greece it is known as The Crisis (Greek: Η Κρίση. It started with sudden reforms and austerity measures. But this made people poor and lose money and land.[1][2]

The Greek economy is in the longest recession of any advanced capitalist economy to date. It is even longer than the US Great Depression. Many well-educated Greeks left the country.[3]

A trade deficit means that a country is buying more than it produces, so it has to borrow from others.[4] Both the Greek trade deficit and budget deficit rose from below 5% of GDP in 1999 to peak around 15% of GDP in the 2008–2009 periods.[5] Greece was perceived as a higher credit risk alone than it was as a member of the Eurozone. Thus investors felt the EU would help out Greece.[6]

Reports in 2009 of Greek government disorganization increased borrowing costs. Greece could no longer borrow to finance its trade and budget deficits at an affordable cost.[4]

The Great RecessionEdit

The Greek crisis was triggered by the Great Recession, which led the budget deficits of several Western nations to reach or exceed 10% of GDP.[7] Greece had high budget deficit (10.2% and 15.1% of GDP in 2008 and 2009, respectively). But at the same time it had high public debt to GDP ratio.[7] Greece appeared to lose control of this ratio, which already reached 127% of GDP in 2009.[8] Being a member of the Eurozone, the country had essentially no autonomous monetary policy flexibility.[9][10]

Internal factorsEdit

In January 2010, the Greek Ministry of Finance published the Stability and Growth Program 2010.[11] The report listed five main causes: poor GDP growth, government debt and deficits, budget compliance and data credibility. Causes found by others included excess government spending, current account deficits, tax avoidance and tax evasion.[11]



  1. (20 July 2015). "BBC: Η Ελλάδα βιώνει ανθρωπιστική κρίση -Εννέα αποκαλυπτικά γραφήματα [εικόνες]".
  2. Naftemporiki (26 March 2015). "Η Ελλάδα και η ανθρωπιστική κρίση".
  3. Oxenford, Matthew; Chryssogelos, Angelos (16 August 2018). "Greel Bailout: IMF and Europeans Diverge on Lessons Learnt". Chatham House. Retrieved 20 August 2018.
  4. 4.0 4.1 "Federal Reserve Bank San Francisco – Research, Economic Research, Europe, Balance of Payments, European Periphery". Federal Reserve Bank of San Francisco. 14 January 2013. Retrieved 3 July 2015.
  5. "FRED Graph". Retrieved 3 July 2015.
  6. Ezra Klein. "Greece's debt crisis explained in charts and maps". Vox.
  7. 7.0 7.1 "2010-2018 Greek Debt Crisis and Greece's Past: Myths, Popular Notions and Implications". Retrieved 14 October 2018.
  8. "Eurostat (Government debt data)". Eurostat. Retrieved 5 September 2018.
  9. "Greece is trapped by the euro". The Washington Post. 7 July 2015. Retrieved 7 April 2019.
  10. "The Euro Is a Straitjacket for Greece". The New York Times. 30 June 2015. Retrieved 7 April 2019.
  11. 11.0 11.1 "Update of the Hellenic Stability and Growth Programme" (PDF). Greek Ministry of Finance. European Commission. 15 January 2010. Retrieved 9 October 2011.