Europe Economy

Greece timeline: It all started in 2001…

The European Central Bank increased the cap on emergency liquidity for Greek banks, two people familiar with the decision said, as it seeks to keep the lenders alive without financing the nation's government.
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The world is watching Europe as Greece and its international creditors try to hammer out a deal that will secure the country's financial future - for the time being at least.

But while many feel that the bout of uncertainty and brinkmanship is down to the country's radical government, Greece's problems go back much further than that.

CNBC takes a look at how Greece got into so much trouble.

By CNBC's Alexandra Gibbs, with assistance from Katy Barnato.

2001: Calm before the storm: Greece joins eurozone

A one-euro coin and a one-drachma coin in front of a Greek national flag
Philippe Huguen | AFP | Getty Images

January 1, 2001

Formerly invited in June 2000, Greece becomes the twelfth country to adopt the single euro currency, ditching its former drachma.

To qualify, Greece had to demonstrate signs of a healthy economy, including meeting targets for price stability and public finances. The country had not qualified to join bloc when it was established in 1999.

2004: Greece confesses to exaggerating figures

Georgios Alogoskoufis, Greek Economy and Finance minister in 2004
Gerard Cerles | AFP | Getty Images

November 15, 2004

To enter the euro zone, certain economic conditions must be met. In late 2004, however, Greece's government admits that it has under-reported the country's budget deficit figures between 2000 and 2003.

A deficit of under 3 percent was required to enter the single currency—however, after a review by the EU's statistics agency Eurostat, Greece's finance minister said it had not fallen below this level since 1999.

2009: Downgrades: Greece is taken down a peg

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December 8, 2009

Fitch downgrades Greece's credit rating to "BBB+" from "A-" marking the first time in a decade that the country has fallen below "A" status.

It comes after the then-finance minister, George Papaconstantinou, warned that Greece's deficit could climb to 12.5 percent of gross domestic product (GDP) during 2009—much higher than expected.

Over the following weeks, a number of other agencies also lower their credit ratings for Greece, fearing its economic recovery is losing its footing.

2010: Greece approves harsh austerity package, anger ensues

Protesters take part in an anti-austerity pro-government demonstration in front of the parliament in Athens February 11, 2015.
Yannis Behrakis | Reuters

March 3, 2010

The Greek government approves a tough austerity package, including public sector pay cuts, pension freezes, and tax rises on cigarettes, alcohol and fuel.

Trade unions in Greece react with anger, setting the stage for violent protests in Athens as the cuts take hold.

2010: Greece: The economic rescue begins

Jean-Claude Trichet, Jean-Claude Juncker and George Papaconstantinou react to ba
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May 2, 2010

The International Monetary Fund and euro zone members agree on a financial aid package for Greece worth 110 billion euros ($146 billion), amid fears that the country's fragile economy could put the whole region in jeopardy.

Greece accepts more cuts as part of the deal, but violent demonstrations erupt as protesters demand an end to austerity.

Since 2010, Greece has received two bailouts worth 240 billion euros.

2011: Greece gets a major debt haircut

Kostas Tsironis | Bloomberg | Getty Images

October 26–27, 2011

After negotiations lasting a whole night, Europe's leaders agree to slash Greek debt as the country's financial problems continue.

Private investors will take a 50 percent "haircut"—or writedown—on their Greek bonds, which will be converted into new loans.

2011: Greek PM Papandreou resigns

Louisa Gouliamaki | AFP/Getty Images

November 6–11, 2011

After assuming office in October 2009, George Papandreou's time as Prime Minister of Greece is marked by (often unpopular) efforts to deal with the country's financial crisis.

After weathering the storm for two years, he resigned following a coalition agreement between his PASOK party and conservative rivals.

2014: Resurrection: Greece returns to bond markets

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April 10, 2014

Investors celebrate as Greece makes its official return to the bond markets, after a four-year break.

High demand for its five-year bonds led some to dub this the "beginning of the end" for Greece's bailout—although this now looks a little premature.

2014: Prime Minister loses key vote

Odd Andersen | AFP | Getty Images

December 29, 2014

Greece's government, led by the New Democracy Party, is thrown into turmoil after parliament refuses to endorse then-Prime Minister Antonis Samaras' presidential candidate.

A snap election is called for January, and the popularity of radical left-wing party Syriza raises some concerns about the future of its bailout program.

2015: Syriza elected

Supporters of opposition leader and head of radical leftist Syriza party Alexis Tsipras cheers at exit poll results January in Athens, Greece.
Getty Images

January 25, 2015

Led by Alexis Tsipras, anti-bailout party Syriza sweeps to victory and forms an unexpected coalition with right-wing Independent Greeks party.

Electing a party that aims to abolish austerity may have lifted Greek spirits, but investors across the world were worried amid growing fears of a possible "Grexit"—or Greece exiting the euro zone.

2015: Euro zone approves bailout extension

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February 24, 2015

Euro zone finance ministers approve a four-month bailout extension for Greece, after the country's new government submitted reform proposals just ahead of the deadline.

The measures include controlling public spending and cracking down on corruption and tax avoidance.

Greece is given a schedule of repayments to different creditors between April and June 2015, however not all of these dates have been met.

2015: Misses IMF payment

A cyclists passes graffiti street art on a billboard showing the stars of the European Union flag and the German word 'Nein', in Athens, Greece, on Tuesday, June 30, 2015.
Yorgos Karahalis | Bloomberg | Getty Images

June 30, 2015

Investors and politicians watch Brussels and Athens with baited breath, as Greek prime minister, Alexis Tsipras, and creditors went back and forth over reform proposals. However, midnight on June 30 comes and goes without a deal and Greece's international bailout expired.

The country also effectively defaults on a 1.5-billion-euro ($1.7 billion) debt repayment to the International Monetary Fund (IMF). This makes Greece the first country to miss a payment to the IMF since Zimbabwe in 2001.

2015: Referendum goes Tsipras' way

Anti-austerity 'No' voters celebrate the results of the first exit polls in front of the Greek parliament in Syntagma Square in Athens, Greece July 5, 2015.
Yannis Behrakis | Reuters

July 5, 2015

In a shock move, Greek Prime Minister Alexis Tsipras holds a public vote on whether to accept the austerity-heavy creditor proposed bailout deal.

Tsipras advises Greek to vote "no," which they duly do—61 percent come out against accepting a deal.

The referendum is viewed by the Syriza party as strengthening Tsipras' hand against accepting further austerity. However, it also increases the risk that creditors will give up hope of any deal, potentially pushing Greece towards a "Grexit" from the euro zone.

2015: Final, final deadline?

Old Greek drachma coins and banknotes
Kostas Tsironis | Bloomberg | Getty Images

July 12, 2015

Members from all 28 countries in the European Union will meet on Sunday to discuss Greece's latest deal proposals, which are due to arrive on Thursday.

The Sunday summit will follow a meeting of euro zone finance ministers on Saturday and is widely seen as the last chance for Greece to strike a deal and avoid a forced exit from the single currency zone.

On Tuesday, European Council President Donald Tusk said that this week was the last chance for a Greece agreement.

"I have to say it loud and clear that the final deadline ends this week. All of us are responsible for the crisis, and all of us have a responsibility to resolve it," he told reporters at a press conference.