Europe's Debt Crisis: Five Threats to the Common Currency
An anti-capitalist piece of graffiti in Athens: Greece's debt crisis is just one of the euro zone's many problems.
Greece: The Euro Zone's Problem Child
Heavily indebted Greece is Europe's biggest problem. The country's debt is already well over 100 percent of GDP and is still rising. According to euro zone rules, total government debt should not exceed 60 percent of GDP. The country's budget deficit in 2009 was almost 13 percent of GDP, more than four times the 3 percent limit allowed in the euro zone.
Debt ratio: 112.6 percent of GDP
Budget deficit: 12.7 percent of GDP (2009)
GDP growth: -1.1 percent (2009 estimate)
Share of euro zone's GDP: 2.6 percent (2008)
Source: European Commission
The Greek government has now announced a program of far-ranging austerity measures in a bid to get its finances in order. It includes several measures affecting public sector workers, such as wage cuts, a hiring freeze and the cutting of supplemental wage allowances, as well as measures to fight tax evasion. But the austerity program does not explain how the public sector can be modernized and how corruption can be fought. Hence a large degree of uncertainty still reigns on the capital markets.
The Greek plan was also not enough to placate the EU. Speaking Tuesday, the EU's monetary affairs commissioner, Joaquin Almunia, said Thursday's summit should make it clear to Greece that any help would be in return for clear commitments. "You can't get support for free," he said. Greece can expect any bailout from other euro zone members to come with strict conditions.
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