IMF and Its Financial Assistance to Greece 2010 The slowing down of economic

Imf and its financial assistance to greece 2010 the

This preview shows page 5 - 7 out of 11 pages.

IMF and Its Financial Assistance to Greece (2010) The slowing down of economic performance in Greece has been recognized since 2008 after a period of strong growth. The country entered into the recession period from 2008 and had no signal of recovery in 2009 and 2010. GDP value from 354.61 billion USD in 2008 reduced down to 329.8 billion in 2009 and continuously reduced to 299.6 billion USD in 2010 (table 3). The public debt was very high as of 146% to GDP. In addition, Greece has not shown any technological progress to increase the labor and capital productivity in various sectors of the economy. To help Greece as a country member, on May 09, 2010, the International Monetary Fund (IMF) has passed a concessional three-year-loan of 30 billion Euro in the hope to help the country recovery its economy, reduce the public debt, push up technological progress and increase its competitiveness. This bailout was a part of the IMF’s financial package of 110 billion Euros to help Greece (IMF, 2010). However, data in the table 3 have shown that the IMF’s financial assistance has not been successful as they expected. The economy did not recover after the assistance as the recession kept going up to the present time. Value of GDP has reduced even after the IMF’s assistance in 2010. Compared to that of 2010, the GDP value in 2014 has reduced by 20%, which was a shock. The standard of living became worse after 2010. The unemployment increased more than double in the period between 2010 (12.7%) and 2014 (26.6%). The public debt as percentage to GDP continued to increase and reached to 177% last year. The country also started the problem of deflation since 2013, which told us that there was a sharp decrease of the aggregate demand of the country. The only improvement was the reduction in the trade balance. Greece has not used the IMF’s financial assistance effectively. The country’s poor macroeconomic fiscal, monetary, investment policies, the heavy burden of the public sector, inefficient production processes might be the possible causes of the problems. Even in 2014,
Image of page 5
Greece faced poor liquidity in the financial market, shortage of credit availability available for households and the corporate sector, and budget expenditure increases (Bastian, 2014). Greece has also been on the brink of bankruptcy in the mid of July, 2015 when it failed to pay he overdue debts to the creditors and considered to leave the European Union. The IMF’s financial assistance in 2010 has proved to be unsuccessful in the case of Greece as they could reach the set objectives when providing the loans. Although the Euro-zone ministers have agreed a third loan of 86 billion Euros on August 14, 2015 to help Greece avoid the bankruptcy and recover the economy, the country needs a precise economic reform programs, both in short term and long term, that require trade-off and great efforts from the government and its citizens. N o Indicators 2007 2008 2009 2010 2011 2012 201 3 201 4 201 5 201 6 1 GDP (bill.USD) 318.6 8 354.6 1 329. 8 299. 6 288. 8 249.
Image of page 6
Image of page 7

You've reached the end of your free preview.

Want to read all 11 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes