OPINION

The fiscal burden

Greece’s fiscal woes are not visible to the naked eye, nor do we seem to fully understand their far-reaching consequences. And though politicians turn a blind eye, the problem is a time-bomb lurking in the foundations of the State and the economy. In the early ’90s, the country came under strong fiscal pressure and the State had to borrow to pay for wages and pensions. In January 1990, Prime Minister Xenophon Zolotas had to issue bonds on a 27 percent interest rate to meet current payments. That was a major shock and the elections that year were held under the shadow of a warning memo by Commission President Jacques Delors and a grim report by Angelos Angelopoulos on the Greek economy. When the Mitsotakis administration came to power, it rushed to implement a very strict fiscal policy to save Greece from bankruptcy. Despite efforts, the problem remained acute, forcing Andreas Papandreou, a one-time deficit creator, to admit in early ’94, «We will have to eliminate public debt, before it eliminates us.» This historic utterance guided PASOK policy until ’97 and soothed social demands on the way to the eurozone. Efforts at fiscal reform subsided in the following years and fiscal woes were disguised for the sake of joining the eurozone. Many hoped then that once the national goal was accomplished the fiscal crisis would be acknowledged and remedied. But the government thought it could restore fiscal order without having to admit to past sins. That was a major mistake. Deficits soared as Greece spent huge sums on defense and Olympics-related projects. The problem will become harder to disguise, and the longer measures are delayed, the more the burden on the shoulders of the country and citizenry will grow.