Greece has taken measures worth almost 63 billion euros since entering the bailout era back in 2010, through which it has achieved a fiscal adjustment of 27 billion euros, according to data presented to the international press this week by Finance Minister Yannis Stournaras on the occasion of Greece assuming the rotating presidency of the European Council.
These measures, including those already voted for 2014, are almost evenly spread between expenditure cuts and revenue hikes, making Greece the country with the greatest fiscal adjustment in the eurozone.
In the five years from 2010 to 2014 inclusive, Greece has taken measures worth 31 percent of the country’s gross domestic product, or 62.92 billion euros. The program has proved to be front-heavy, as the year with the most measures was 2010, when they totaled 19.07 billion euros, or 8.6 percent of GDP. In 2011 the measures amounted to 18.24 billion, or 8.8 percent of GDP, which was on the wane. The measures adopted have had a direct impact on the economy, with GDP shrinking from 231 billion euros in 2009 to 222 billion in 2010 and 208.5 billion in 2011.
Over time, the need – as well as the scope – for new measures has decreased, with the smallest measures taken for 2014 (3.86 percent). However it was in 2013 that a major change to the fiscal policy mix occurred: While from 2010 to 2012 Greek governments took more measures increasing taxes than cutting spending, the current government decided last year to drastically reduce state expenditure and increase its revenues to a lesser degree. Consequently, in 2010, Greece took measures cutting spending by 8.35 billion euros and boosting revenues by 10.72 billion, while in 2013 spending was cut by 8.09 billion while the targeted revenue growth was just 2.13 billion. The same policy is continuing in 2014. In total, from 2010 to 2014, expenditure measures amounted to 33.31 billion euros while those to increase revenues came to 29.61 billion euros.
The figures point to the conclusion that for every 1 billion euros’ worth of measures Greece takes, its primary surplus improves by 430 million euros. They also prove that the impact of the recession has been greater than expected in the effort to streamline the country’s public finances, as a large part of the measures taken have not fetched the anticipated results – i.e. the well-known problem of the fiscal multipliers that were not calculated correctly at the start of the streamlining process.