Timeline: Greece debt crisis

Reuters

Posted at Apr 24 2010 07:33 PM | Updated as of Apr 25 2010 03:33 AM

Here is a timeline of economic events in Greece since Prime Minister George Papandreou's socialist PASOK party won an election last October.

November 2009

--The new government pledges in its 2010 draft budget on November 5 to save Greece from bankruptcy by cutting the budget deficit of 12.7% of GDP -- more than double the previously announced figure -- while keeping electoral promises to help the poor.

-- A final budget draft on November 20 shows Greece aims to cut the deficit to 8.7% of GDP in 2010 to show EU partners and markets it is serious about restoring fiscal health.

-- It also sees public debt rising to 121% of GDP in 2010 from 113.4% in 2009. EU 2010 forecasts on Greece are worse, with the deficit seen at 12.2% of GDP and national debt rising to 124.9%, the highest ratio in the EU.

December 8 -- Fitch Ratings, which had cut Greece to A- when the government revealed the higher deficit, cuts Greek debt to BBB+ with a negative outlook, the first time in 10 years a ratings agency has put Greece below the A investment grade.

December 14 -- Papandreou outlines policies to cut the budget deficit and try to regain the trust of investors and the EU.

December 16 -- S&P cuts Greece's rating to BBB+ from A-, saying austerity steps announced by Papandreou are unlikely to produce a sustainable reduction in the public debt burden.

December 22 -- Moody's cuts Greek debt to A2 from A1, the third agency to downgrade Greece, but still two notches above that of Fitch and S&P. Spread between 10-year Greek and German Bunds tightens because downgrade less severe than expected.

January 2010 - Greece unveils a stability program on January 14 saying it will aim to cut its budget gap to 2.8% of GDP in 2012 from 12.7% in 2009. Unions protesting against the austerity plan announce strikes for February.

February 2010 - Papandreou says on February 2 the government will extend a public sector wage freeze to those making below 2,000 euros a month for 2010, excluding seniority pay hikes.

February 3 -- the EU Commission says it backs Greece's plan to reduce its budget deficit below 3% of GDP by 2012 and urges Greece to cut its overall wage bill.

-- Greece must refinance 54 billion euros in debt in 2010, with a crunch in the second quarter as more than 20 billion euros becomes due. A 5-year bond issue in January is five times oversubscribed but the government has to pay a hefty premium.

February 24 -- A one-day general strike against the austerity measures cripples Greece's transport and public services.

February 25-- An EU mission to Athens with IMF experts delivers a grim assessment of the nation's economy.

-- Finance Ministry official says the inspectors anticipate Greece can cut the deficit by about 2 percentage points, short of a 4 percentage point target for 2010.

March 2010 - EU Economic Affairs Commissioner Olli Rehn asks Greece to announce further measures to tackle its budget crisis.

March 5 -- New package of public sector pay cuts and tax increases passed by the government to save an extra 4.8 billion euros. The measures include raising VAT by 2 percentage points to 21%, cutting public sector salary bonuses by 30%, increases in tax on fuel, tobacco and alcohol, and freezing state-funded pensions in 2010.

March 11 -- Public and private sector workers strike.

March 15 -- Euro zone finance ministers agree on a mechanism that will allow them to help Greece financially if needed, but reveal no details.

March 18 -- Papandreou warns Athens will not be able to make deficit cuts if its borrowing costs remain high and may have to call in the IMF.

March 19 -- European Commission President Jose Manuel Barroso urges EU member states to agree a standby aid package for Greece. Barroso says the 16 countries that share the euro currency should be ready to make coordinated bilateral loans.

March 25 -- European Central Bank President Jean-Claude Trichet says that the ECB will extend softer rules on collateral, easing the risk of Greek institutions being cut off from funding at the end of this year.

-- Euro zone leaders agree to create a joint financial safety net, with the IMF, to help Greece and to try to restore confidence in the euro. Under the accord, Athens will receive coordinated bilateral loans from other countries that use the euro and money from the IMF, but only if all states agree to the bailout and if it has exhausted its borrowing options.

April 2010 - The finance minister on April 6 denies that Greece is seeking an amendment to the safety net agreement. Investors batter Greek assets before and after the denial.

April 11 - Euro zone finance ministers approve a giant 30-billion-euro ($40 billion) emergency aid mechanism for debt-plagued Greece but stress Athens had not requested the plan be activated yet.

April 13 -- European Central Bank policy makers give the thumbs-up to the euro zone's rescue package as the country passed a key test of its ability to raise fresh funds.

April 15 - EU monetary chief Olli Rehn says there is no possibility that Greece will default on its debts and no reason to doubt Germany's commitment to an EU pledge to help.

-- An International Monetary Fund official says that Greece has expressed interest in a three-year precautionary IMF agreement, which will only be tapped when Greece requests the funding.

-- Parliament adopts a tax reform bill, backing government moves to tackle tax evasion and shift the fiscal burden to higher-income earners as Athens looks for ways to slash its massive budget deficit.

April 16 -- European finance ministers, meeting in Madrid, discuss Greece's debt crisis but say Athens was seeking to clarify how an emergency aid mechanism would work, rather than requesting it.

April 19 - European and IMF officials due in Athens to discuss details of the aid package are delayed by a volcanic ash cloud that has disrupted transport across Europe, adding to investor uncertainty and pushing Greek debt spreads over German bonds to a euro era record of 482 basis points.

April 21 - Greece starts talks to hammer out details of a potential aid deal but investors dump Greek assets on a lack of clarity over whether the funds would come in time. Germany's opposition Social Democrats said they opposed "fast-track" approval for the deal in parliament. The yield on the Greek 10-year bond rose to 8.4%, the highest since at least 1998.

April 22 - The European Union's statistics office reveals Greece's budget gap in 2009 was worse than feared, and Moody's Investors Service downgraded its rating of Greek government debt. The news triggered a fresh slide in the asset prices of Greece and other debt-choked European countries. Greece's two-year government bond yields soared four percentage points to 12.26%.

April 23 - Greek Prime Minister George Papandreou asks for the activation of an EU/IMF aid package aimed at pulling the euro zone member out of a debt crisis in what could be the largest state bailout ever attempted.