T
he recovery, however, is fragile, as the
country’s over-indebted economy is sub-
ject to the conditions of the third stabilisa-
tion programme (MoU) of 2015, which limit the
expansion of domestic demand. This leaves the
Greek economy mostly with two policy-levers to
ensure a more robust recovery: expand export
demand and attract investments.
In the case of Greece, a precondition to this
process is the implementation of more essential,
effective and socially acceptable reforms that
should have been properly determined and imple-
mented in the first two stabilisation programmes
of 2010 and 2012. What happened instead over
the last five-six years were serious reform miscal-
culations (see IMF’s
ex-post
evaluation report,
February 2017), which resulted in significantly
ineffective remedies, generating one of the most
protracted recessions ever recorded in the indus-
trial world, a rising debt-to-GDP ratio, an increase
in non-performing loans (NPL), a failure to meet
the otherwise unrealistic programme conditionali-
ties and finally, considerable political instability.
Fast forward to 2015 and 2016, Greece undertook
important reforms aimed at creating a friendlier
environment in doing business: the one-stop-
shop for registering a new business entity was
established, and the process of licensing was
remarkably simplified by using an electronic plat-
form that interconnects several government
agencies and by drastically reducing the time to
set up businesses and registration fees, while
abolishing minimum capital requirements for limit-
ed liability firms.
To further consolidate and expand the progress
achieved so far, more reforms are scheduled.
These include: reducing remaining barriers to
competition by eliminating the influence of oligop-
olistic and special interest groups; attacking tax
evasion and tax avoidance, which would signifi-
cantly increase tax revenues and could in turn
reduce taxes, increase social expenditures and
engender confidence in a fair tax system; and
finally, further reforming the public administration
and the judiciary.
With regard to the remaining reforms under the
Trade with Greece
12
After seven years of harsh fiscal austerity policy
and uneven structural reforms that caused a
deep recession, the Greek economy is entering
positive growth territory.
The Greek economy
is entering positive
growth territory
By Dimitri B. Papadimitriou,
Minister of Economy and Development
