The Troika Period Reconsidered

Abstract

The importance given constantly to debt sustainability exercises by the official lenders of Greece at this point underlines, above all, the importance of the debt-to-GDP ratio as it juxtaposes all the malfunctions and shortcomings of both the private economy and state apparatus. During the period of strong growth, the denominator in the ratio could maintain acceptable projections for the dynamics of the public debt, especially given the low interest rate environment that was secured by euro area membership. However, in spite of these appearances, government expenses started rising at a faster rate, as a percentage of GDP, after 2003 gradually eroding the long-term projections of the public finances.

Appendix: OECD Structural Indicators in Key Network Industries

While Greece emerges among most of network industries as a late and reluctant reformer, something further underscored by the fact that often the key legislation that is imposed by EU directives and laws is not truthfully implemented in the end, the figures also show that in most OECD countries the essential wave of reform started after the mid-1990s in most key sectors, and especially those explicitly mentioned in the program of the 1990–1993 government. The OECD data therefore also supports the assertion that had this government been able to complete its program, it would have placed Greece ahead, or at least at the beginning, of the deregulation and modernization wave of the main European economies. It must be stressed here that in many cases the OECD indicators are reflecting the implementation of EU legislation at the national level, and that thus their scope does not always accurately capture developments that also involve indirect state control. This cautionary note simply reflects the fact that such indicators never are perfect, something that in no way diminishes their importance and usefulness. Related, the analysis of Duval and Elmeskov (2005) reflects for Greece especially the implementation of European Community legislation after 1995, and the impact of a number of reforms that had been initiated before 1994 (Figs. 5.3 and 5.4).

Fig. 5.3

OECD structural indicators in key network industries. Note: 0 worst, 6 best (inverse from original OECD index). Thus an increase in the level of the index over time indicates an improvement. Evolution of index through time and for all countries index is available. First in line always country with lowest current performance. These are the OECD indicators of regulation in non-manufacturing sectors (NMR). These indicators measure regulation at the sector level in 34 OECD Fig. 5.3 (continued) countries and 22 non-OECD countries. The indicators presented here cover seven network sectors (telecoms, electricity, gas, post, rail, air passenger transport, and road freight). For further details see Koske, I., I. Wanner, R. Bitetti, and O. Barbiero (2015), “The 2013 update of the OECD product market regulation indicators: policy insights for OECD and non-OECD countries,” OECD Economics Department Working Papers. PMR: Product Market Regulation. Source: OECD structural indicator database, author’s presentation

Fig. 5.4

OECD PMR indicator: Greece and average of euro area countries that are also OECD members. Source: OECD Product Market Regulation (PMR) index. Lower is better