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Greece Debt Crisis Essay

681 words - 3 pages

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Background of Greece and its debt: Greece is a developed country, with a high standard of living and it ranks 25th in the world in Human development Index in 2007. Greek's GDP growth as an average since the early 1990s has been the highest among the EU average. But despite these factors it has significant economic problems, which include unemployment, inefficient bureaucracy and corruption. In 2009, its economic growth was negative for the first time since 1993 due to over lending. By the end of 2009, due to a combination of factors of international financial crisis and domestic spending prior to October 2009 nation elections, Greek economy faced its most severe crisis with highest budget deficit of 12.7% of GDP. It had the second highest debt to GDP ratio in the EU. Unemployment in Greece reached 9.8% in October, 2009 which is 2.4% higher than October in previous year. There is a significant challenge faced by the newly elected PASOK government to persuade the people that cut in public spending, public services, government administration and defence budget is vital. It must also tackle its budget deficit which is escalating out of control, and bring it in alignment with the EU rules within three years under the increasing pressure of financial markets. Greece financial difficulties are getting worse as Fitch has downgraded its credit rating to BBB+ and S& P has done the same, thus raising the cost of borrowing in Athens. Even though Greece is trying to raise funds and cut costs, it might need external help to get out of the crisis.

In conclusion, even though...

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