Group 5B

CEO : Mallika Tandon Raghav Vig Mohit Taneja Linh Pham Thuy Ankit Singhvi Mahipatraj

IMF’s Involvement in Greek Crisis

Literature Review The International Monetary Fund (IMF) is an international

organization headquartered in Washington, DC, of "188 countries working to

foster global monetary cooperation

secure financial stability,

facilitate international trade

promote high employment

sustainable economic growth

reduce poverty around the world

Greece was one of the country which was affected the most by the economic crisis. IMF played a major role in helping Greece overcoming the economic crisis by providing bailouts.

The first bailout was given to Greece in 2010 of amount €107.3 billion of financial assistance, €72.8 billion were disbursed by March 2012 comprising the undisbursed amounts of the first programme and additional €130 billion for the years 2012–14.

Literature Review(References)

• Howard, S. (3). IMF agrees to the latest Greek rescue package. Washington Post, The.

• Hugo, D. (2013, June 7). IMF broke rules with €220bn Greek deals. Daily Mail. p. 8.

• Daponte-Smith, N. (2015). The IMF And David Cameron Express Reservations Over Greek Deal. Forbes.Com, 26

• Kouretas, G. P., & Vlamis, P. (2010). The Greek crisis: causes and implications.Panoeconomicus, 57(4), 391-404.

• Meghir, C., Vayanos, D., & Vettas, N. (2010). The economic crisis in Greece: a time of reform and opportunity. August, 5, 5-6.

The Greek Crisis: Causes and ImplicationsThis paper mainly discusses about the origin of Greek crisis and its implication on euro currency and the whole of Europe. In the aftermath of the 2007-2009 financial crisis the enormous increase in debt which has led to negative outcome, since public debt was dramatically increased in an effort by the US and the European governments to reduce the accumulated growth of private debt in the years preceding the recent financial turmoil. Although Greece is the country member of the euro zone that has been in the middle of this ongoing debt crisis, since November 2009 when it was made clear that its budget deficit and mainly its public debt were not sustainable. As a result of this negative downturn the Greek government happily accepted a rescue plan of 110 billion euros designed and financed by the European Union and the IMF. A long and strict austerity steps are to be implemented in the next three years.

The Economic Opportunity of Greece's exitThe economic opportunity of Greece's exit When the Euro crisis erupted in 2010, with lacking the necessary expertise and avoiding the Eurozone’s collapse became the top political imperative, so they turned to the IMF for help.However, with the irregularities in the Fund's resulting intervention, it reveals that the aim of the Greek bailout was not to restore prosperity to the country's people, but to save the Euro zone. If Greece exit from the Eurozone, which would allow Greece to begin correcting past mistakes and putting its economy on the path to recovery and sustainable growth. At that point, the EU would be wise to follow suit, by unravelling the currency union and providing debt reduction for its most distressed economies. Only then can the EU's founding ideals be realized.

IMF agrees to the latest Greek rescue package The article describes the attempt of IMF to provide aid to Greece in form of $36 Billion. IMF aims to distribute the money over a period of 4 years which will help heavily indebted Greek government afloat provided Greece restructures its economy, trims public payrolls and spending and grapples with deep recession1. The ECB’s measures taken were convincing European officials that the worst crisis was over. Reviewing the years 2010 and 2011, IMF was optimistic that Greece’s problems did not seem so dire and that the risk to other European nations seem to reduce since private bond holders of Greek bonds had accepted losses on government debt. However IMF’s spending was criticized by countries like India and Brazil since a lesser amount was given for rescue programs in Latin America and Asia.

IMF broke rules with €220bn Greek dealsA WAR of words broke out between the IMF and the EU over the bungled bailouts of Greece which totalled almost €220billion. The IMF admitted to 'notable failures' in handling the Greek crisis and accused European officials of being more concerned with saving the euro than rescuing the debt-ridden country. The IMF said it was forced to break its own rules for providing financial assistance to Greece because EU leaders refused to take action to solve the crisis.The scathing report stated that the catalogue of errors - including harsh austerity measures inflicted on Greece - plunged the country deeper into crisis. Greece is in its sixth consecutive year of recession, with unemployment at 27 per cent and youth unemployment at 62.5 per cent. The IMF said the 'dramatic contraction' in the Greek economy was driven by the refusal of European officials to consider writing off the country's debts as early as 2010. The EU insisted that writing off Greek debt as suggested by the IMF would have led to 'devastating consequences' as investors fretted about losses in other Eurozone countries.

The IMF and David Cameron Express Reservations over Greek Deal.The article cites the doubts expressed by IMF and the Great Britain on the fore coming Greece bailout. It describes the three options proposed by IMF for the bailout, the first two being explicit annual transfers to the Greek budget, and the third one is giving Greece 30 years to settle the debt. It tells the reasons why the IMF is not going to support the bailout in its present form. The article also suggests the reservations expressed by David Cameron suggesting the fact that British taxpayer’s monies won’t be diverted towards bridging the Greek loan. It further goes on to describe the opposition expressed by Syriza central committee towards the deal .Although it is very rare for the IMF, David Cameron and Syriza radicals to agree on anything, yet the opposition has led to a huge degree of doubt regarding the present form of the deal.

Turmoil of Great

Recession

Sudden crisis in

confidence among lenders

Structural weakness in Greek Economy

The Greek Crisis

International Monetary

Fund

Bailout 1 Bailout 2 Bailout 3

Conceptual Framework

Research Purpose Research Objective

The aim of this research is how IMF’s

intervention affected Greek’s economy during their crisis.

Research Questions

Was IMF justified in bailing out Greece? How does gender and/or pre-crisis expenditure

affect the post-crisis expenditure? How has the aggregate expenditure changed after

the Greek crisis?

Research Strategy

Literature

Review

Collection of Primary

data to gauge the effects of the crisis on the

people of Greece

Collection and

processing of secondary

data to accept or reject

the tested hypothesis in an

attempt to answer research

questions

Information Needs Primary Data Collection

Type: Survey

https://goo.gl/0lwToX

Secondary Data

Sigma Known

Sigma Unknown

Chi Square Test

Regression Data

Research Analysis

Thank you