What is Greece crisis ? How it spread in Eurozone? What measure are taken by Govt?

1. Greece Crisis and its Impact Presented by: SumitTamrakar BhartiVidyapeeth’s Institute of management &Information Technology,Mumbai

2. Contents Introduction to Greece Economy. Reasons for Greece Crisis. Impact of US Sub Prime crisis on Greece. Impact on Major European Economies. Impact on India. Measures taken by ECB, IMF ,ESM, EFSF to overcome crisis. Current News. Conclusion.

3. Introduction to Greece Economy Capital – Athens Currency before Euro – Drachma Adopted Euro as currency in the year 1999 Main Sectors with greater contribution to GDP a) Shipping b) Tourism

5. Mismanagement

6. Unregulated Labor Market

8. The Boom in the Market! Greece borrowed heavily in international capital markets to fund government budget and current account deficits. Accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid.

9. Greek economy - significant problems: Government expenditures increased by 87%, revenues grew by only 31%. Rising Unemployment. Insufficient Bureaucracy. Tax Evasion. Corruption.

10. Impact of Crisis: South-eastern Europe:Greece’s foreign policy focus on the region and growing trade volumes between the countries, neighbouring Serbia, Albania, Macedonia, Romania, Bulgaria and Turkey cannot remain indifferent to the magnitude of the crisis next door.

11. Exposure to Greece Direct exposure of U.S. banks to the Greek government is relatively small. Direct U.S. exposure to Greece more generally includes the Greek government and the Greek private sector. The BIS defines “other potential exposures” as derivative contracts, guarantees, and credit commitments.

13. Markets

14. Liquidity Situation

15. Rupee Value

17. Measures 5.ECB starts buying govt. debt from secondary market to reduce bond spread and to increase the confidence of investor . Between May 2010 to June 2011 ECB purchased €78 billion bonds ,out of which €45 billion from Greece govt.

18. Measures 6. EFSF(European Financial Stability Fund ) : The EFSF is intended to consist of a fund of €750 billion, which would be made up as follows: (a) €440 billion would be made available in loan guarantees from Euro zone Member States;(b) €60 billion would consist of emergency funds made available by the European Union itself; and(c) €250 billion would be provided under arrangements with the International Monetary Fund.

20. 10% cut in Bonuses & payment of overtime work.

23. The 13th and 14th salaries paid to civil servants and public utilities employees were abolished & flat-rate vacation allowances totaling €1,000 a year were introduced for public sector workers earning less than €3,000 per month.

24. Limit of €800 per month to 13th and 14th month pension installments; abolished for pensioners receiving over €2,500 a month.

26. Current News Both France & German are trying to save Greece, and would go bankrupt if there were a sudden default. Greece's finance minister has told to resolve the debt crisis, there will be a 50pc haircut for bondholders. US is putting pressure on EU for saving Greece, otherwise it leads to double dip recession.

27. CONCLUSION As we discussed due to over public expenditure and over-borrowed. Now Greece is in a verge of default. Now Greece govt. is taking tight austerity measures to bring down budget deficit to 0.9% of GDP by 2015. But due to excessive expenditure cut & unemployment, the disposal income(savings) of public will be reduced. The EU, IMF and ECB lending to Greece to solve the underlying problem. But the maximum money is spent for repayment of debt not for productive use. Though they are pumping money in Greece, they are not sure about the future of Greece Economy. Now the condition is in a dilemma whether to save Greece or let it go default.

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