Fears of a sovereign debt crisis developed In early 2010 concerning
some countries in Europe including: Greece, Ireland, Spain, and Portugal. This led to a crisis of confidence as well as the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.

Concern about rising government deficits and debt levels across the globe together with a wave of downgrading of European Government debt has created alarm on financial markets. The debt crisis has been mostly centred on recent events in Greece, where there is concern about the rising cost of financing government debt.

On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh Greek austerity measures. On 9 May 2010, Europe's FinanceMinisters approved a comprehensive rescue package worth almost a trillion dollars aimed at ensuring financial stability across Europe

Stimulates:

The Greek economy was one of the fastest growing in the eurozone during the 2000s; from 2000 to 2007 it grew at an annual rate of 4.2% as foreign capital flooded the country. A strong economy and falling bond yields allowed the government of Greece to run large structural deficits. According to an editorial published by the Greek newspaper Kathimerini, large public deficits are one of the features that have marked the Greek social model since the restoration of democracy in 1974.

After the removal of the right leaning military junta, the government wanted to bring disenfranchised left leaning portions of the population into the economic mainstream. In order to do so, successive Greek governments have, among other things, run large deficits to finance public sector jobs, pensions, and other social benefits. Initially currency devaluation helped finance the borrowing.

After the introduction of the euro Greece was initially able to borrow due the lower interest rates government bonds could command. Since the
introduction of the Euro, debt toGDP has remained above 100%. The global financial crisis that began in 2008 had a particularly large effect on Greece.
Two of the country's largest industries are tourism and shipping, and both were badly affected by the downturn with revenues falling 15% in 2009.
To keepwithin the monetary union guidelines, the
government of Greece has been found to have consistently and deliberately misreported the country's official economic statistics. In the beginning of
2010, it was discovered that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001 for arranging transactions that hid the actual level of borrowing.

The purpose of these deals made by several subsequent Greek governments was to enable them to spend beyond their means, while hiding the actual deficit from the EU overseers.

In 2009, the government of George Papandreou revised its deficit froman estimated 6% (or 8% if a special tax for building irregularities were not to
be applied) to 12.7%. In May 2010, the Greek government deficit was estimated to be 13.6% which is one of the highest in the world relative to GDP.

Greek government debt was estimated at €216 billion in January 2010. Accumulated government debt is forecast, according to some estimates, to
hit 120% of GDP in 2010. The Greek government bond market is reliant on foreign investors, with some estimates suggesting that up to 70% of Greek
government bonds are held externally. Estimated tax evasion costs the Greek government over $20 billion per year.

Despite the crisis, Greek government bond auctions have all been over-subscribed in 2010 (as of 26 January). According to the Financial Times on
25 January 2010, "Investors placed about €20bn ($28bn, £17bn) in orders for the five-year, fixedrate bond, four times more than the (Greek) government
had reckoned on." In March, again according to the Financial Times, "Athens sold €5bn (£4.5bn) in 10-year bonds and received orders for three times that amount."

Downgrading of Debt:

On 27 April 2010, the Greek debt rating was decreased to 'junk' status by Standard& Poor's amidst fears of default by the Greek government. Yields
on Greek government two-year bonds rose to 15.3% following the downgrading.

Some analysts question Greece's ability to refinance its debt. Standard
& Poor's estimates that in the event of default investors would lose 30–50% of their money. Stock markets worldwide declined in response to
this announcement.

Following downgradings by Fitch, Moody's and S&P, Greek bond yields rose in 2010, both in absolute terms and relative to German government
bonds. Yields have risen, particularly in the wake of successive ratings downgrading. According to the Wall Street Journal "with only a handful of
bonds changing hands, the meaning of the bond move isn't so clear." As of 6 May 2010, Greek 10- year bonds were trading at an effective yield of
11.31%.

On 3 May 2010, the European Central Bank suspended its minimum threshold for Greek debt "until further notice", meaning the bonds will remain
eligible as collateral even with junk status. The decision will guarantee Greek banks' access to cheap central bank funding, and analysts said it
should also help increase Greek bonds' attractiveness to investors. Following the introduction of these measures the yield on Greek 10-year bonds
fell to 8.5%, 550 basis points above German yields, down from 800 basis points earlier.

Regards,

Engr. Shoaib Awan

Assistant Engineer (Production)
Oil & Gas Development Company Ltd.(OGDCL)
Islamabad