The Success of Greek Structural Reforms

ATHENS – Since July 2015, when the Greek government and its European counterparts agreed to a new bailout deal, my country has made immense efforts to implement structural reforms under tight deadlines. And while the reforms have at times been controversial – they touch on some of the most sensitive areas of the economy – they have also been successful. In the face of fierce domestic political opposition and an entrenched culture of mismanagement and corruption, the government is bringing about all the reforms asked of it.

The measures called for by the bailout program were adopted within a very short period of time; indeed, many of them were part of previous agreements, but had never been implemented. The areas that were addressed include the financial sector, health care, pensions, the judicial system, and the tax regime. Other reforms are expected to improve the performance and effectiveness of the civil service and boost economic competitiveness.

In the financial sector, the recapitalization of Greece’s four “systemic” banks was an important step toward stabilizing the economy. After years of painful uncertainty, the Greek banking sector is now one of the most stable in the eurozone. The government also passed legislation aimed at improving the management of private debt and facilitating its restructuring. And it established mechanisms to resolve problems related to non-performing loans in the private sector. The safety net to protect the primary residences of low-income households was also fine-tuned.

The ongoing pension reform – both extremely sensitive and of paramount importance for the future of the Greek social-security system – has been the most heated subject of debate. The government’s proposals have three aims: to guarantee that future generations will receive a pension; to ensure that all employed people are entitled to receive a national pension; and to minimize the cost of the system and make it self-sustaining.