The Greek Sovereign Debt Crisis: Antecedents, Consequences and Reforms Capacity

Abstract

The purpose of this paper is to investigate the antecedents and the consequences of the Greece debt crisis as well as highlighting the reforms capacity. The approach adopted in this paper is to answer the questions such as “what is the background of the Greece debt crisis and how it is originated?”, “which antecedents caused the Greece vulnerable to the crisis?”, “what are the twin constraints being faced by Greece and its consequences?”, “which measures are taken to gain fiscal stability in the Greece under Stability and Growth Pact?” and “what are the rescue possibilities available to Greece to withstand the crisis? Is bail out the only possible solution?” These questions are used to guide the search or studies and analysis thereof and major emerging themes are presented. The key findings of the study are some main factors that triggered the crisis. These are misstated statistics by Greek government, weak co-ordination and organization, high expenditures in comparison to revenues, corruption, tax evasion, weak welfare system and inflexible employment laws. The research limitation is based on the limited scope of the study as some important question regarding the Greece debt crisis is yet to be answered and some aspects of literature are needed to be explored further. Since the main objective of this study is to explore the antecedents that caused Greece vulnerable to the crisis and its aftermaths, it also aims at explaining the fiscal stability measures under taken by Greece under Stability and Growth Pact along with explaining the bail- out alternative available to the Greece perhaps as a last resort. Moreover, this paper highlights the various steps being upheld for reforming Economic Monetary Union (EMU) governance. Thus, this study provides an opportunity to probe into the overall economic and fiscal scenario of Greece under debt crisis.