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Hi guys. Here are some of the interesting facts that I found worthwhile to share from the article on Greece’s financial crisis:

After Greece has adopted the single currency, euro, the Greek government began to borrow (euros) mostly from foreign investors. These European lenders were happy to lend to Greece because the interest rate was high enough to take into account the risk involved. And within the border, the Greek government had kept its policy of spending more than it received from taxes, which ultimately results the government in budget deficits.

After years of overspending, its budget deficit went out of control. It was during the global financial downturn, Greece’s hidden borrowings came to light, and also the time it no longer able to repay its loans, which then forced to ask for help from its European partners and the IMF in the form of massive loans.

After the first international rescue plan of €110 billion in May 2010, Greece had to be bailed out again in March 2012, involving additional funding of €130 billion and write-off on privately held Greek sovereign debt. In November 2012, the Eurozone and the IMF granted Greece further debt relief of €40 billion through a combination of measures (new repayment deadlines and lower interest rates on certain loans already granted, repurchase by the Greek government of the debt still held by private creditors).

These rescue packages provided by the EU and IMF not only allow Greece to repay its creditors, but also prevent investors from worrying about investing in other highly indebted nations. These packages are essential because if investors stop buying bonds issued by other highly indebted governments, then these governments in turn will not be able to repay their creditors – a potential disastrous cycle.