A Period Of General Economic Decline

1197 Words Sep 16th, 2016 5 Pages
In the late 2000s, a period of general economic decline occurred in world’s markets. Even though the Great Recession, as it was called, varied from country to country it is concluded that it was the worst economic recession since WW2. (Davis, 2009).

Greece’s case was somewhat peculiar. While the crisis in Europe progressed from banking system crises to sovereign debt crisis, in Greece it happened the other way. In 2010 the Greek government revealed that the deficit of Greece in 2009 had made the public debt no longer viable. The country tried to regain the trustworthiness of the global markets by reducing its expenditures. This didn’t work and the government of George Papandreou, in April 23, 2010, requested the help of the IMF. (Προσφυγή της Ελλάδας στο μηχανισμό στήριξης ανακοίνωσε ο πρωθυπουργός, 2010). Greece was the first country in the euro area to request financial support from the IMF.

But, “to drive through the Greek bailout, the fund bent its own rules. It lifted an IMF ban on the fund lending money to countries – like Greece - that were unable to pay their debts.” (Wroughton, Schneider, & Kyriakidou, 2015).

“The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. ‘The board was not consulted or informed,’ it said. The directors discovered the bombshell ‘tucked into the text’ of the Greek package, but by then it was a fait accompli.”…
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