Download Greek bailout agreements

Greek bailout
agreements
By Depi Svyrinaki
Frini Kollitiri
Vasia Nikolopoulou
Contents
 Introduction – Background
 Causes of the Greek Crisis
 First Economic Adjustment Program
 Second Economic Adjustment Program
 Third Economic Adjustment Program
• Greece joined the European
Communities on 1 January
1981, adopted the Euro in
2001 and became the 12th
member of the Eurozone area.
Over the next 7 years the
country's GDP per capita
nearly tripled, from $12,400 in
2001 to $31,700 in 2008
High living standards…
• Widespread investments in industrial enterprises and heavy
infrastructure
• funds from the European Union
• growing revenues from tourism, shipping and a fast-growing service
sector
In the meantime though…
• The Greek government, encouraged by the European Commission,
European Central Bank, private banking institutions, and the Greek
business community also took out loans
• Government deficits were also consistently underreported
Causes of the Greek Debt Crisis
As the Financial crisis of 2007–08 began to affect Greece's
economy, the country's GDP fell by nearly 20% from 2008 to 2010
and the government's capacity to repay its creditors was drastically
reduced.
• Excessive expenditures
• Tax evasion
Causes of the Greek Debt Crisis
• Unregulated labor market
• Corruption
• Heavy loans in order to fund government bugdet and current
account deficit
• Accumulated high levels of debt when the markets were liquid
And then in 2010…
First Economic Adjustment Programme
• On 2 May 2010, the Eurogroup agreed to provide bilateral loans pooled by
the European Commission for a total amount of €80 billion to be
disbursed over the period May 2010 through June 2013
• The financial assistance, agreed by euro-area Member States, was part of a
joint package, with the IMF committing additional €30 billion under a
stand-by arrangement (SBA).
• In exchange, Prime Minister Papandreou commits to austerity measures,
including 30 billion euros in spending cuts and tax increases.
Second Economic Adjustment
Programme
• On February 21 2012 EU agrees to New Greek Bailout. The deal
includes a 53.5 percent debt write down—or “haircut"—for private
Greek bondholders.
• In exchange, Greece must reduce its debt-to-GDP ratio from 160
percent to 120.5 percent by 2020. Greece and its private creditors
complete the debt restructuring on March 9.
Second Economic Adjustment
Programme
• The euro area Member States and the IMF committed the
undisbursed amounts of the first programme (Greek Loan Facility)
plus an additional €130 billion for the years 2012-14.
• The second programme would be financed by the European
Financial Stability Facility (EFSF), which had been fully operational
since August 2010
Between the Second and the Third
Programme
• EU Adopts Fiscal Compact
• ECB Unveils Unlimited Bond-Buying Plan
• Eurozone Revises Greek Bailout
• Greek Parliament Approves Austerity Measures
Between the Second and the Third
Programme
• Greece Returns to International Bond Market
• ECB Announces Quantitative Easing
• Syriza Wins the Elections
• Greek Bailout Expires
• Greek Parliament Supports New Deal
Third Economic Adjustment
Programme
• It started on 19 August 2015 and is scheduled to run until 20
August 2018.
• The financial assistance of up to €86 billion is provided by the
European Stability Mechanism (ESM).
• The conditions for receiving financial assistance include a number
of measures and reforms
• The overall aim of the programme is to secure a return to
sustainable economic growth in Greece.
That’ s all folks…