6 - The Economic Adjustment Programmes of Greece (2010–2018): Why Failure?

Summary

On 2 May 2010, the Eurogroup and the International Monetary Fund agreed to a three-year €110 billion loan to Greece (which was deprived from the private capital markets) in order to avoid a sovereign default. The loan was conditional on the implementation of austerity measures to restore the fiscal balance, privatisation of government assets to keep the debt pile sustainable as well as implementation of structural reforms to improve competitiveness and growth prospects. In October 2011, Eurozone leaders consequently agreed to offer a second €130 billion loan for Greece, conditional not only on the implementation of another austerity package (combined with the continued demands for privatization and structural reforms outlined in the first programme), but also on a restructuring of all Greek public debt held by private creditors. In August 2015, a third programme was agreed, offering Greece an additional €86 billion loan. In 2018, the third programme was concluded. Does this delay reflect the failure of economic adjustment programmes in the case of Greece? The purpose of this chapter is to answer this question.