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The crisis in Greece and the EU-IMF rescue package: Determinants and pitfalls

Author

Listed:
  • Anna Visvizi

    (DEREE — The American College of Greece, 6 Gravias Street, 153-42 Aghia Paraskevi, Athens, Greece)

Abstract

The sovereign debt crisis in Greece represents a very interesting case in which the Greek government succeeded in transforming domestic fiscal deficit problem, overspending and fear of free market reforms into a European challenge consistent with justifiable concerns about the sustainability of the euro-project and its likely future. In this paper, the roots of the crisis and the way of addressing it are discussed. In particular the features, drawbacks, missed opportunities and pitfalls of the €110 billion EU/IMF rescue package granted to Greece are examined. It is argued that the government’s focus on taxation rather than on politically costly privatization and cutbacks in the public sector undermined economic activity in the country, decreased the government’s revenue, and spawned disincentives for investment, without generating growth and without improving competitiveness. In brief, rather than contributing to economic recovery, the opposite was achieved as a result of the measures implemented by the government.

Suggested Citation

  • Anna Visvizi, 2012. "The crisis in Greece and the EU-IMF rescue package: Determinants and pitfalls," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 62(1), pages 15-39, March.
    • Handle: RePEc:aka:aoecon:v:62:y:2012:i:1:p:15-39
    Note: Paper presented at the 17th Annual Conference of the Hungarian Political Science Association (Budapest), titled “Structures and Futures of Europe”, held at the Central European University, 20–21 May 2011. Warm thanks go to László Csaba for his comments on an earlier version of this paper. I am also grateful to two anonymous reviewers for their ideas and suggestions. While writing this paper, I have benefited from my conversations with Brigitte Young and Katarzyna Yukrowska. Usual disclaimers apply.
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    Citations

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    Cited by:

    1. Voszka, Éva, 2012. "Competition Policy in Europe – Temporary or Long-Lasting Changes? : Changes of the principles and the practice of state aid during the crisis," Public Finance Quarterly, Corvinus University of Budapest, vol. 57(1), pages 71-90.
    2. Győrffy, Dóra, 2014. "Válság és válságkezelés Görögországban. A puha költségvetési korlát szerepe a gazdasági összeomlásban [Crisis and crisis management in Greece. The role of soft budget constraints in the economic co," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 27-52.
    3. Manisha Sinha, 2014. "Re-imagining the International Monetary Fund," South Asian Survey, , vol. 21(1-2), pages 194-210, March.
    4. István Benczes & Balázs Szent-Iványi, 2017. "The European Economy: The Recovery Continues, but for How Long?," Journal of Common Market Studies, Wiley Blackwell, vol. 55, pages 133-148, September.
    5. ORASTEAN Ramona, 2014. "The Lending Arrangements Of The Imf In European Union In Times Of Crisis – Characteristics And Evolutions," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 9(1), pages 134-141, April.
    6. Voszka, Éva, 2015. "Államosítás, privatizáció és gazdaságpolitika - a főirány széttöredezése [Nationalization and privatization - in the shadow of changing paradigms of economic policy]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 717-748.
    7. Győrffy, Dóra, 2013. "Crisis Management in the EU, Prospects for the De-politicisation of Economic Policy," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(2), pages 119-132.
    8. Zachary Kramer, 2019. "Fiscal Sovereignty under EU Crisis Management: A Comparison of Greece and Hungary," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(4), pages 595-624, December.
    9. Konstantinos Spinthiropoulos & Efthymia Tsiatsiou & Alexandros Garefalakis & Georgios Chaitidis & Eirini Stavropoulou, 2021. "Memoranda in Greece and their Impact on Public Employees’ Earnings: Payroll Data from a Greek Public University," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(4), pages 104-119.
    10. Istvan Benczes & Balazs Szent-Ivanyi, 2015. "The European Economy in 2014: Fragile Recovery and Convergence," Journal of Common Market Studies, Wiley Blackwell, vol. 53, pages 162-180, September.
    11. Sarımehmet Duman, Özgün, 2022. "A thorough look into the state-market divide: depoliticisation of privatisation in post-crisis Greece," LSE Research Online Documents on Economics 114448, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Greece; crisis; Eurozone; IMF adjustment programme; currency union;
    All these keywords.

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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