Greece Crisis - Free Essay Example

THE CURRENCY CRISIS IN GREECE Greece Greece is a high developed country, with a high standard of living and with very high human development index. According to the data given by the IMF (International monetary fund) Greece economic ranked 25 th among the world countries and 33 rd in purchasing power parity during the year 2007-2008. The main industries in Greece were Tourism, shipping, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. In the year 1999 Greece adopted the EURO as its currency. THE CRISIS In 2008, Greece borrowed heavily in international capital markets to fund government budget and current account deficits. This resulted in accumulation of high levels of maturing international debt obligations in the year 2009. The economy of the Greece government decreased rapidly. The government did not take its European membership serious. It just produced falsified budget figures like the actual GDP was 6. 7% the government showed it’s GDP as 12. 6%. It misused the benefits of EU membership by financing the government debt at much lower interest rates. THE CAUSES FOR THE CRISIS The domestic cause for the Greece crisis were, * High government spending – where the government expenditures increases by 87% the has resulted in only 31%. * Corruption in structural reforms * Tax evasion * Insufficient bureaucracy * Over staffing and poor productivity in the public sector * Rising unemployment The following are some of the international cause for the crisis, * The adoption of Euro * Enforcement of the European members to limit the debt