The Greek financial crisis and the outlook of the Greek economy

The paper consists of two parts. In the first part, a short review of the crisis in the Eurozone in 2008 and of the measures which have been taken is provided. The second part outlines the causes of the severe imbalances and high debt loads of government in Greece, which have become a threat to the countryʼs solvency and to the stability and possibly the survival of the European Monetary Union. The paper considers the causes of the Greek crisis in order to indicate policies that would help avoid future problems in Eurozone countries facing severe and persistent fiscal imbalances. Measures taken, based on the First and Second Economic Adjustment Programme for Greece, are also reviewed. An assessment is made of the implementation of Greek Economic Policy in the context of the Euro crisis, in conjunction with the three crucial challenges that Greece faces, namely restoring growth and securing both fiscal sustainability and the financial system. The negative lessons from public sector adjustment in Greece show that positive measures must be taken.