Greece

Programme overview

Greek Loan Facility (bilateral loans and IMF, 2010-2011)

EFSF and IMF programme (2012-2015)

ESM programme (2015-2018)

Lenders: EFSF: €141.8 billion; ESM: €61.9 billion; euro area countries (under GLF): €52.9 billion; International Monetary Fund (€32.1 billion).

Economic adjustment and reforms

Having adopted the euro in 2001, Greece was able to borrow at low interest rates despite its falling competitiveness and weak public finances. While government spending and borrowing increased, tax revenues weakened due to poor tax administration. Public debt soared and investor trust in Greece was seriously undermined. The Greek economy contracted sharply in 2008 and unemployment climbed to alarming levels. Furthermore, the country’s public administration was oversized and not sufficiently efficient. Greece had to rely on external financial assistance to continue financing its government debt.

During the first and second programmes, wide-ranging reforms were carried out to address Greece’s problems, and in 2014, the country recorded GDP growth for the first time since 2007 and unemployment began to fall. In the first half of 2015, Greece reneged on its reform commitments, and, as a consequence, the second programme was not completed and the country fell back into recession. The third programme enabled Greece to remain in the euro area as it returned to the implementation of much-needed reforms.

The financial assistance packages were tied to economic adjustment programmes, which focused on:

• Restoring fiscal sustainability;
• Safeguarding financial stability (bank recapitalisation; reduction of non-performing loans);
• Enhancing growth, competitiveness and investment (labour and product market reforms);
• Increasing the efficiency of public administration and the judicial system.

Thanks to the implementation of reforms, Greece was able to achieve an unprecedented fiscal adjustment from very high budget deficits in the early programme years to a surplus in 2017. In the same year, the country restored economic growth and regained market access. Important improvements and measures were introduced in the field of public administration; product, service and labour markets; pensions; tax administration; and the financial sector.

After the programme

Following the completion of Greece’s ESM programme in 2018, post-programme surveillance (PPS) has been carried out by the European Commission in liaison with the European Central Bank. The procedure involves regular review missions in the programme country to assess its economic, fiscal, and financial situation. The ESM participates in PPS missions to fulfil the requirements of its Early Warning System, i.e. to assess a country’s capacity to repay its outstanding loans.

Greece’s continued to modernise its economy, strengthen its banks, reduce imbalances, and boost competitiveness. As a result, the Greek economy was structurally more resilient at the start of the pandemic than it was prior to the sovereign debt crisis. Past reforms, though quite painful at times, enabled the country to mount a vigorous response to the pandemic. In part because of the fiscal support, Greece experienced a rapid recovery from the pandemic.

Greece completed the repayment of IMF loans ahead of schedule in April 2022.

ESM country team coordinator for Greece: Paolo Fioretti

ESM Disbursements to Greece

Weighted average maturity of loans: 32.35 years (after repayment of €2 billion).

Floating rate notes issued by the ESM¹

  ¹ The ESM issued floating rate notes for the purposes of funding bank recapitalisation/resolution. Notes amounting to €5.4 billion were disbursed to Greece; the remaining €4.6 billion was not used and the notes were subsequently cancelled. The amount was disbursed pro rata in ESM floating rate notes listed above.
 

Loan repayment

Previous financial assistance for Greece

Euro area Member States provided the first financial assistance package to Greece, supplying €52.9 billion in bilateral loans under the Greek Loan Facility. EFSF financial assistance, part of the second programme, ran from March 2012 through June 2015. In this programme, the EFSF disbursed a total of €141.8 billion, of which €130.9 is outstanding.

More details about EFSF financial assistance for Greece