GREECE: A EUROPEAN MECHANISM OF THE EXIT FROM THE CRISIS

Abstract

Historical aspects of the creation of European countries of the integration association − the EU are highlighted. Historical stages and reformation of the accession of the Greek economy to the EU are estimated. After the restoration of the democracy in Greece, the negotiations about its accession, which lasted three years (July 1976 − May 1979), were intensified again. January 1, 1981, Greece joined the European Community. Since the country’s accession to the EU in 1981, GDP has grown substantially. Considering the level of inflation before and after the accession of Greece to the EU, by 1981, the inflation rate was gradually increasing, and after accession, particular in 2002, the inflation rate stabilized when Greece fully implemented the euro. Despite the GDP growth, the decline of the level of inflation, the Greek government carried out a thoughtless populist policy, spending huge loans from the IMF on social welfare of the population. While the national industry required significant investments. That’s why it’s not surprising that, since 1981, Greece’s national products turned out to be uncompetitive with European analogs in the context of liberalization of foreign trade, and its negative foreign trade balance more increased. Although the amount of export and import of goods and services at current prices between Greece and countries of the EU increased.

The decrease of labor productivity, lack of modernization measures of agriculture as a priority sector in Greece led to an increase in the budget deficit and the debt load of the Greek economy. In 2008, government revenues declined even more, which led to bankruptcy of enterprises and a large reduction of employees. Also the macrofinancial assistance to Greece over 2010−2018 for the sum of 288.7 billion euros for the exit from the debt crisis is considered. The implementation of three macrofinancial assistance programs required the Greek government to implement a series of reforms that should reduce the debt deficit and debt load. The last effects of loans of the IMF and the European Stabilization Mechanism are evaluated.

JEL: F02.