Within the context of research by the European Parliament (EP), focusing on the role of the Troika in the Greek crisis, Greek Finance minister Yiannis Stournaras described mistakes and missed opportunities by the EP, which played a decisive role in the course of the crisis. Despite this, he also highlighted the important part played by Greece’s European partners, which helped to stabilize the situation and will ultimately lead to a recovery of the economy.
Mr. Stournaras criticized the Eurozone for not correctly diagnosing the core problems of the Greek economy in good time. While commenting on the first Memorandum, he highlighted that it included overly ambitious goals for the reduction of deficit and debt, while at the same time underestimated fiscal multipliers and the depth of the recession. Furthermore, the Memorandum had a strict time-table for delivery of crucial reforms based mostly on taxation increases rather than on expenditure reduction. Moreover, the fact that Eurozone officials repeatedly referred to Grexit as if it were unavoidable, made the situation far worse.
He also conceded that Greece made many mistakes, including delays in reforming the tax administration system and combating evasion, along with unnecessary bureaucracy in the public sector, both of which could not be confronted effectively. He also highlighted that since the implementation of the measures set out in the first Memorandum, Greece has lost about 25 percent of GDP, while households have lost more than 35 percent of their disposable income.
Despite this, Stournaras described cooperation with the Troika as “generally fruitful,” even though there have been disagreements and differing assessments on the best way forward for the reform program.