National Bank of Cambodia

នដាយរបនោលពីក្លរខរបរបួលម្នអរតបត ូររបាក្់និងេីផារភាគហ៊ែុននៅនលើពិភពនោក្។ នដាយសារខត្វ ិបត្តិក្ំពុងរ ីក្រាលដាលឥេធិពលន្ទនពលអន្ទគត្ គឺអារស័យនៅនលើភាពធៃន់ធៃរនិងក្រមិត្ម្នក្លររ ីក្រាលដាលម្នវ ិបត្តិននោះ។Greece’s sovereign debt crisis and itsimpacts on the global economyThe sovereign debt crisis in Greece has been an issue in world financialmarkets since the end of 2009. In May 2010 Greece became the first euro-area countryrequesting a financial rescue from the European Union and International MonetaryFund (EU/IMF) worth €110 billion. Although it has been more than a year since thebailout, the public debt problem remained unresolved as attested by (1) the rise inGreece’s two-year government bond yields of more than 300 basis points; (2) thecontinuous downgrade of Greek sovereign rating to below investment grade evenunder the EU/IMF program; and (3) the rise in Greece’s credit default swaps (CDS) toa steep 23.5 percent (as of 14 July 2011), reflecting around 87 percent probability thatGreece may default within the next five years. Most importantly, the Greece crisis hasspread to other peripheral countries, namely Ireland and Portugal, which have alsorequested financial assistance from the EU and IMF in November 2010 and April2011, respectively. This sovereign debt problem has become a significant risk to theworld financial market and economic recovery.Causes of the Greek debt crisisGreece’s public debt has been at an elevated level since 1989 and as of the endof 2010 amounted to 329 billion or 148.2 percent of GDP. Such a high public debt toGDP ratio is almost three times larger than the threshold set by the Maastricht Treatythat stipulates. That public debt does not exceed 60 percent of the output for membercountries. Greece has also experienced large fiscal deficit, which registered at 10.5percent of GDP at the end of 2010 higher than the euro area average of 6.0 percentand one of the highest in the world.The sovereign debt crisis in Greece is primarily caused by four factors. Thefirst is the lack of fiscal discipline due to populist welfare policies, e.g., three-times-ayearbonuses as well as a minimum retirement age of 50, which is below theinternational average, and the attendant entitlement for pension benefits that isinconsistent with the average lifespan. Such policies led to increases in publicspending, particularly on wages, pensions, elderly aids, and unemployment benefits,which accounted for more than 75 percent of Greece’s public expenditures.៣៦ ២ ២០១១National Bank of Cambodia Review No 36, 2 nd Quarter 201141