This aspect caught the government of Greece unawares because the expenditure that had been made on the defense equipments was so high meaning that the rest of the country’s economy had been under budgeted. The major economic sources that comprised of tourism and the shipping industry were adversely affected by the economic deterioration that had hit all parts of the world. Lack of monetary fund to plan and budget for the governmental and non-governments needs arose in 2010. This caused the government of Greece to request for a loan in late April in the year 2010 from the European Union and International Monetary Fund (IMF) so that it could be able to cater for its needs and the needs of its citizens. Researchers announced few days after the issuing of the loan that the Greek government could not be able to repay the loan thus the investors that have invested in the Greek government and companies risked losing almost half of their investments. This announcement caused fear among the investors, existing and willing investors, and they withdrew from their original plans to avoid further losses. Effects of the crisis of Greece The Greek government had to introduce drastic measures that led to the infliction of high economic standards to the citizens of Greece in May that year. The high cost of living and low-income rates due to high taxes and other governmental requirements made the Greek citizens to have a series of peaceful protests, which later turned into social instability and riots in Greece. The International Monetary Fund in conjunction with European Union intervened and added an additional loan to the Greek government in 2011 on condition that it could regulate the flow of money and economy (James, 2001). In addition, Greece was supposed to come up with a structure of repaying the loan. This structure was to be produced by the Greek government and agreed upon by the International Monetary Fund, European Union and the Greek government. The European Union gave pressure to the prime minister of Greece due to the improper management and governance during his regime and threatened to withdrawal part of the loan that they were supposed to process for the Greek government. This led to George Papandreou step down to give room for an election of a new and focused regime to cover for the damages caused and give room for more external and internal donations and loans. The resigning of the prime minister caused or led to the release of the percent of the loan that had remained and the appointment of an interim prime minister to take control of the debt repayment and proper use of allocated funds. Scholars and economic analysts has been following up the case of the Greek economic break down and that of the European Union and are suggesting a possible break through for the European nations. The economic analysts are suggesting that the Greek government should stop using Euros and bring back its former currency, drachma, as its currency until it stabilizes. However, this would result in a political and economical instability and deterioration (Drazen, 2011). Some scholars argue that the reintroduction of the drachma would result to a more than 50% fall in its value if Greece chose to drop the use of Euro. This would mean that that the Greek government would suffer from high rates of inflation and there are possibilities of riots, military coups and war. In order to avoid this outcome, the
Euro Crisis in terms of the Greek debt issue Name Institution Date Euro Crisis in terms of the Greek debt issue Introduction Greece had experienced a rapid growth in its economy in the year 2000. The economic growth of Greece during this time was regarded to be the fastest growing in Europe (James, 2001)…
There are above 500 million residents in the EU who comprises of 7.3% of the population of the world (Osterreichische Akademie der Wissenschaften, “European Union reaches 500 Million through Combination of Accessions, Migration and Natural Growth”). As of 2010, the gross domestic product (GDP) of the EU was 16,242.25 billion USD, which represents around 20% of the global GDP in terms of purchasing power parity (PPP) (International Monetary Fund, “Report for Selected Country Groups and Subjects”).
However, some peripheral European states accrued enormous unjustifiable losses and increased public debts, risking the entire European financial system and the viability of the euro. The weak implementation of financial regulation created a sovereign debt crisis.
The crisis threatened to spill over to other major economies in the trading block, which would cause a major issue for other global economies. The Eurozone crisis was mainly centered on Greece, which had the biggest levels of public debt and the highest budget deficits in the Euro region.
Governments prepare deficit budgets and, therefore, have to borrow resources from either internal or external sources in order to finance the deficit. This situation, if not well controlled and monitored, increases the total government debt. The credit ratings of most European countries like Spain, France, and Italy significantly declined as revealed by the moody and S&P during the year 2010 and 2011 (Mora, 2006).
According to Schafer (1), the causes of such a crisis varied from country to country. The crisis brought about serious economic and political effects on most countries. The debt crisis affected a number of countries like Portugal, Greece, Spain, Italy and Ireland among others.
By the start of the millennium, the Eurozone appeared to be performing well economically. Most countries in the European Union were performing well and some economists argued that the countries would be amongst the most competitive economies in the world.
The students, those who are pursuing higher education in colleges and universities outside their home town in particular have to bear the costs of college fees, accommodation, living expenses and other courseware related costs. (Deshmukh, 2010) Due to less employment opportunities and lack of means for income generation students are on a very tight budget which is borne either by their parents or by banks as loans.
The debt crisis affected a number of countries like Portugal, Greece, Spain, Italy and Ireland among others. In the year 2001, Greece joined the EU (Schäfer, 1). Greece had to pay a return rate that was higher than the fiscal market.
s, consequences and implications of international debt crisis, it is in order to delineate the unblemished concept ‘debt crisis’ Debt crisis deals with national economies and their abilities to repay loans. It is a situation when nations are not able to pay the debt it owns
12 pages (3000 words)Research Paper
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