Greece After Its Debt Crisis: What Changed in Its Public Finances

what happened

The Wall Street Journal reports that in 2010 Greece narrowly avoided a disorderly default, and the street protests of that period looked much like today's unrest in Paris and Milan. The picture is different now: the economy is growing faster than the EU average, and the state collects more money than it spends. Most of Greece's debt is held by official European lenders and carries fixed, low rates.

According to the paper, the turnaround rests not only on tough measures but also on a shift in thinking, as citizens better understand budget limits. Prime Minister Kyriakos Mitsotakis said people remember the pain of the crisis. The budget has kept a primary surplus since 2016, apart from the pandemic years, and a crackdown on unpaid value-added tax helped lift revenues.

The article also notes that other European countries face aging populations straining pension systems, and attempts to cut benefits meet strong public resistance.

why it matters

For markets, Greece's experience shows how long-term budget discipline can lower risk premiums and reduce borrowing costs. Athens now borrows more cheaply than Paris, London or Washington, reflecting investor confidence in its finances. Such differences feed into how investors assess sovereign risk across the euro area.

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