WHAT IS HAPPENING IN

GREECE?

DEBT CRISES

The Government starting to face a debt crises which stated to develop in late 2009, right after the recession.

The status of the Greek government debt was downgraded to a high-yeild bond (also known as a “junk bond”) by April 2010.

The IMF and countries of the Eurozone agreed to a $110 Billion (in Euros) bail out loan for Greece with the condition of implementing a harsh austerity measures.

This led to a decline in the use of private capital markets in terms of covering financial needs

Greece were at risk of going into default.

ECONOMIC SITUATIONS There has been a decline in

the GDP up to 13% annually since the crises.

By 2012, Greece went through a burden in terms of debt with 198% of GDP, one of the highest in the world.

As a member of the Eurozone, Greece cannot simulate its economy while monetary policies have been implemented.

There has been a decline in the currency of the Euro and stock markets worldwide since the government debt has been downgraded to “junk bond”.

WHO IS HE?

GEORGE PAPANDREOU He was elected as Prime Minister of Greece on October 6, 2011.

Prior to his tenure as Prime Minister, he was the Minister of National Education and Religious Affairs on 2 occasions and the Minister of Foreign Affairs. After facing almost 2 years of the debt crises, he resigned November 11, 2011 to make room for a national unity government. This led to Lucas Papademos being appointed as Prime Minister.

He is currently the last Pime Minister to be elected.

Greece in 2012 43 lawmakers from the ruling Socialist PASOK and the New Democracy were expelled from their parties thus reducing the ruling majority from 236 seats to 193 seats. This will allow the IMF , European Central Bank and the European Union to release jointly funds that will cover Greece’s debt from 2012-2014.

On February 21, the Greek Government ratified a second bailout package worth of $130 billion (in Euros) which was under negotiations by Eurozone leaders since October 2011.

The reason for the expulsion of the lawmakers was that they voted against a bill that will finalize a 5th harsh austerity package.

The austerity package was released on Febuary 12. The previous 4 were released since 2010: February 4, 2010; March 5, 2010; May 1, 2010; June 2011 (mid-term)

5th Austerity Package

The Austerity package was under negotiations from October 2011 until January 2011 by Parliament in order to prevent themselves from default.

The Austerity Package includes:- Reducing the minimum wage of $750 (in Euros) per month by 22%.- Cancellation of holiday wage bonuses (2 months worth of full-time pay).- $300 million (in Euros) worth of pension cuts in 2012.- Reduction of 150,000 from state sector by 2015 (15,000 by 2012). - Law changes to make it easier to layoff workers. - Health and Defence spending cuts. - Rights given to the industry sector in terms of reducing wages.- Opening up closed professions to increase competition, particularly in health, tourism, and real estate sectors.- Privatizations worth $15 billion (in Euros) which includes Greek gas companies such DEPA and DESFA.

Social Impact The debt crises created a huge social impact, causing protests and riots which started on May 5, 2010 in Athens.

In 2012, 500,000 protestors gathered in Athens to protest against the Prime Minister after the release of the 5th austerity package.

Many stores were looted and burned.

About 200 people were injured: 150 protestors, 50 officers

3 people died from the protests.

http://www.youtube.com/watch?v=NljVxqRpbw0

MAY ELECTION Happened on May 6 to elect 300 members of the Greek Legislature.

This elections a year ahead of schedule based on the decisions of other members of the Eurozone and the IMF.

The purpose of this election was to form a coalition government in order to deal with the crises.

The New Democracy party won with 108 seats.

BACKGROUND OF THE IMF Came to existence after World War II.

They play a part in shaping the global economy .

They make significant financial contributions towards countries who are heavily in debt or at risk of going into default.

There are 188 members of the IMF.

The headquarters is located at Washington D.C .

Key IMF ActivitiesThe IMF supports its membership by providing

policy advice to governments and central banks based on analysis of economic trends and cross-country experiences;

research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets;

loans to help countries overcome economic difficulties;

concessional loans to help fight poverty in developing countries;

technical assistance and training to help countries improve the management of their economies.

Articles of Agreement It was adopted at the United Nations Monetary and Financial Conference at Bretton Woods, New Hamshire on July 22, 1944.

Came in place on December 27, 1945. There have been some modifications towards the agreement since it’s inception.

There 31 articles that are listed in the Agreement.

Articles include; Currency Membership Administrative and Financial Restrictions Withdrawal of membership Conditions such as free trade and austerity measures Interests

http://www.imf.org/external/pubs/ft/aa/index.htm

ORGANIZATION LEADERSHIPBoard of Governors 2 governors are appointed from each member of the IMF. Meet once a year and appoint the Executive Directors of Executive Board. Advised by the International Monetary and Financial Committee and Development Committee .

Excecutive Board There are 24 Executive Directors in the Board representing all 188 members of the IMF. As of 2008, each of the eight countries appoint an Executive Director: United States, Japan, Germany, France, U.K, China, Russia and Saudi Arabia. The remaining 16 represent from 4 to 22 countries.

Managing Director The Managing Director serves as the head of the IMF and Chairman of the Executive Board. There have been 11 overall managing directors with 5 of them coming from France. Christine Legarde serves as the current Managing Director of the IMF.

DOMINIQUE STRAUSS-KAHN Strauss-Kahn served as the Managing Director of the IMF from November 1, 2007-May 18, 2011.

On May 14, 2011, Strauss Khan was arrested and charged with sexual assault on 32-year-old housekeeper, Nafissatou Diallo in the Sofitel New York Hotel.

4 days later, he resigned as Managing Director.

He was placed under house arrest on May 19, 2011.

He was dismissed of all charges on August 23, 2011.

After the case, his wife dropped out the French Election.

http://bcove.me/nv1cp4nf

ACTIVITY TIME!

CAD

Rate: 1 CAD = 0.997673 USD

$1000 CAD

USD

Rate: 1 USD = 1.00233 CAD

$ 997.67 USD

The Currency of the Jamaican Dollar (JMD) is $0.60 USD. On September 6, 1993, the Jamaican government were in heavily in debt and requires financial assistance (a loan) from the IMF. The IMF release a bailout loan with conditions that have been implemented. One of conditions was to devalue the currency by 20%.

On October 13, 1993, an American tourist wanted to exchange $100 USD on a currency exchange rate.

By exchanging $100 USD on a currency exchange rate, how much money will the tourist will receive in Jamaican dollars?