Economic Crisis in Greece (CRS Report for Congress)
| Release Date |
Revised July 7, 2015 |
| Report Number |
IN10295 |
| Report Type |
Insight |
| Authors |
Rebecca M. Nelson, Specialist in International Trade and Finance |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Questions about whether Greece will stay in the Eurozone have resurfaced, as the government's stalemate with the International Monetary Fund (IMF) and Eurozone creditors has reached a critical point. Greece's economic crisis was triggered in 2009, when it was revealed that successive Greek governments had been misreporting data on its budget deficit. Questions about the sustainability of Greek public finances eroded investor confidence and shut the country out of financial markets, when it was still struggling to recover from the global financial crisis. The crisis in Greece spilled over to other Eurozone countries, including Ireland, Portugal, and Cyprus. Concerned about the systemic risks Greece could pose to the rest of the Eurozone and the broader international economy, other Eurozone governments and the IMF extended two financial assistance packages to the Greek government (in 2010 and 2012) totaling €240 billion (about $270 billion). In 2012, Greece also restructured its debt, with investors taking substantial losses (75% on a net present value basis). The European Central Bank (ECB) initiated a series of policy measures, including providing liquidity support to Eurozone banks and purchasing or pledging to purchase government bonds in secondary markets, which were broadly credited with stabilizing market panic and limiting contagion. More than five years after the onset, Greece's economy remains in crisis. Since 2007, its economy has contracted by nearly 25%, a contraction some analysts believe is worse in relative terms than the Great Depression in the United States. Unemployment has tripled to nearly 25%, and public debt has risen from 103% of GDP to 173% of GDP. Additionally, the assistance program has been in derailed by a stalemate between the Greek government and its creditors; no money has been disbursed by the Europeans or the IMF in nearly a year. Meanwhile, the economic situation in other Eurozone crisis countries, including Ireland, Portugal, and Cyprus, has stabilized.
