Click through the timeline below to see how Europe's debt crisis began and evolved.
Greece's budget deficit higher than previously thought
Greece's budget deficit was revealed to be 12.7 percent of gross domestic product, or GDP, nearly twice what it was thought to be and four times higher than it was supposed to be. In addition, its debt-to-GDP ratio was twice the limit allowed in the treaty, which established the common currency.
In order to become a full member of the euro area, countries had to fulfill the convergence criteria spelled out in the Maastricht Treaty. The agreement required that countries keep inflation in check and their budgets in order. Prerequisites were also set for exchange rates and interest rates.
Originally, member countries were required to have government deficits of no more than 3 percent of GDP. Also the debt-to-GDP ratio was required to be no more than 60 percent of GDP. The Stability and Growth Pact was reformed in 2005 to allow a little more flexibility.
Unfortunately, the budget troubles of Greece surpassed even the widest wiggle room. Though the Greek prime minister at the time, George Papandreou, declared that Greece's budget deficit was 12.7 percent of GDP, Eurostat later reported that the Greek budget deficit in 2009 was actually 13.6 percent of GDP. Eurostat is the statistical office of the European Union.