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The debt crisis in Greece has been going on for nearly a decade, and now Greece is on the verge of its fourth bailout in seven years.
Here's a complete breakdown and timeline of the debt crisis in Greece...
Timeline of the Debt Crisis in Greece: 2007-2008
Greece was hit especially hard during the global economic recession of 2007 and 2008. Before the crisis, country officials had been understating the deficit for years. Greece was burning through cash faster than anyone knew.
When the recession hit, Greece couldn't keep hiding its deficit problem because it could no longer pay its bills.
2009: Greece's Debt Begins to Soar
- Oct. 20: Budget deficit of Greece expected to reach approximately 12.5% of GDP. The deficit exceeds the 3% of GDP set for Eurozone member states by the Stability and Growth Pact.
- December: All three credit rating agencies downgrade Greece's credit rating.
Once Greece announced it was understating its deficit and announced the true deficit in October 2009, the country was unable to borrow money on the open market. The announcement called into question the financial stability of Greece.
2010: Austerity Packages and a Bailout for Greece
- Feb. 20: Austerity package No. 1 approved by Greek Parliament.
- March 3: Austerity package No. 2 approved by Greek Parliament.
- April 23: Greece formally requests Greek bailout.
- April: All three credit rating agencies downgrade Greece's credit rating.
- May 2: First bailout worth €110 billion ($116.1 billion); austerity package No. 3 announced.
- May 6: Austerity package No. 3 approved by Greek Parliament.
- July 7: Greek Parliament passes pension reform that is required by the EU and the IMF.
- Dec. 15: Greek Parliament passes laws regarding employee compensation at state-owned companies.
When Greece was shut out of the markets in October 2009, it careened towards bankruptcy. By spring of 2010, Greece needed to be bailed out.
In anticipation of the formal request for a bailout of Greece, the EU, the IMF, and Greece agreed to bailout measures.
In February and March 2010, Greece enacted those measures in the form of two austerity packages. The packages froze salaries for government employees, cut bonuses for government employees, and increased taxes on fuel, cigarettes, alcohol, and luxury goods.
Within nine days of the formal request, Greece received aid and announced the third austerity package. This package was approved three days later despite nationwide protests and riots.
2011: Greece Continues Austerity Measure in Exchange for Bailout Funds
- January-July: All three credit rating agencies downgrade Greece's credit rating at least three times.
- June 29: Austerity package No. 4 approved by Greek Parliament.
- Sept. 11: Greek Parliament approves new property tax.
- Oct. 20: Austerity package No. 5 passed by Greek Parliament.
In order to receive ongoing bailout payments, Greece had to keep implementing austerity measures. These measures continued to cut government spending and increase taxes.
2012: Greece's Economy Tanks Requiring Another Bailout
- Feb. 12: Austerity package No. 6 passed by Greek Parliament.
- Feb. 21: Second bailout package finalized.
- Nov. 7: Austerity package No. 7 passes by Greek Parliament.
- Nov. 11: Greek Parliament passes 2013 austerity budget.
The austerity packages that were designed to put Greece on better financial footing created economic problems for the country. From 2008 to 2012, unemployment rose from 8.2% to 22.7%. At the same time, GDP shrank from $354.46 billion to $245.67 billion.
The shrinking economy (and tax base) and rising unemployment lead to another bailout and intensified the debt crisis in Greece.
On top of a shrinking economy, Greece was required to pass more austerity measures. The measures passed in 2012 increased the retirement age, reduced pension amounts, and cut pay for civil servants.
2013: Continued Layoffs Cripple the Greek Economy
- April 28: Greek Parliament passes reform bill.
- July 17: Greek Parliament passes new reform bill.
- Nov. 30: Moody's upgrades Greece's credit rating.
The reform bill passed in April eliminated 15,000 state jobs by the end of 2014. The bill made it easier to fire civil servants, increased working hours for teachers, and reduced property taxes.
In July, the new reform bill laid off thousands more and further cut wages for civil servants.
Greece's unemployment rose to 27.1% in 2013, while GDP dropped to $239.86 billion.
2014: Greek GDP Tanks Despite Budget Surplus
- Jan. 14: Primary budget surplus of 1.5% of GDP for fiscal year 2013.
- March 30: Greek Parliament passes multi-bill that is needed to receive next bailout payment.
- May 9: Greek Parliament passes medium-term Fiscal Strategy Plan 2015-2018.
- May 23: Fitch upgrades Greece's credit rating.
Greece is finally able to bring in more than it spends (separate from debt payments) and continues to pass reforms needed to receive bailout funds.
Unemployment sees a slight improvement by dropping to 26.9%, but GDP keeps falling. The Greek GDP for 2014 was $236.08 billion.
2015: Default and a Third Bailout for Greece
- Feb. 20: EU and Greece agree to four-month loan extension.
- June 4: Greece asks IMF to postpone payment due June 5 until the end of the month.
- June 27: Referendum on a bailout agreement announced.
- June 28: Greek Parliament approves referendum.
- June 30: Greece misses loan payment to IMF.
- July 11: Greek Parliament approves government bailout.
- July 13: Greece and the EU agree to a €86 billion ($90.77 billion) loan over three years. It will need approval from all parties.
- July 16: Greek Parliament approves first round of measures required by creditors.
- July 23: Greek Parliament approves second round of bailout measures.
- Aug. 14: Greek Parliament approves third bailout.
- Nov. 19: Government passes new austerity package.
In June 2015, Greece becomes the first developed country to default on a loan to the IMF. The default leads to a third bailout and more austerity measures.
2016: Slight Improvements Go Largely Unnoticed
- Jan. 23: Standard & Poor's upgrades Greece's credit rating.
- May 8: Greek Parliament approves new austerity package.
- May 22: Greek Parliament approves additional tax measures.
Despite what looks like improvement, Greece is still in debt far beyond what it could hope to pay back without an improved economic outlook.
Unemployment remains well above 20%. The reason unemployment remains so high is that Greek government spending accounted for 54% of the GDP in 2009 and as much as 62% in 2013. For comparison, the U.S. government spending accounts for about 30% of GDP.
2017: A Fourth Bailout for Greece Is Possible
In July, Greece is due for a repayment of €7.4 billion ($7.81 billion), which it can't afford. Germany, the dominate player in the EU, and the IMF are at opposite sides of the issue for another Greece bailout.
Germany is demanding further austerity measures, while the IMF is calling for better economic policies and a reduction in Greek debt.
This divide among Greece's lenders will further complicate bailout talks leading up to the July due date.
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