Greece enjoyed a very high standard of living which ranked it 29th on the Human Development index. Greece is a good case of what corruption can do to finish off a country. Greece is the most corrupt nation in Europe if one excludes Bulgaria. Greece’s underground economy (i.e.black money)
Which is around 25% of its GDP is very high for a European nation. Along with corruption,the crisis in Greece has also come about due to uncontrolled Government expenditure and the public sector accounted for 40% of its GDP. Greece is a welfare state and provided 32% of its 2012 budget for social services and pensions.
When Greece entered the European Union in the year 2000, its Government presented manipulated figures so that it qualified to enter the union. In 2009, the budget deficit stood at 15.4% which is unacceptable for any country. Its debt stood at 126% of its GDP which is far above the danger mark. (India presently has a debt equaling 76% of its GDP and its fiscal deficit is hovering round 5%). This led to further debt to service the debt and it spiraled to 148% of its GDP.
Greece’s GDP contracted by 6.8% during the year 2011 and the unemployment rate is presently around 21%.
It was about to go bankrupt when the IMF and the other Eurozone countries intervened and bailed it out with a loan package. Whether Greece would be able to service this package later is the billion Euro question. In order to obtain the bailout package, Greece had to agree for harsh austerity measures which resulted in social unrest. The other Eurozone nations are threatening to throw it out of the European Union if it does not deliver on the austerity measures and reduce its budgetary deficit.
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