Eurozone Bailouts: Greece's Least Austere Period in Modern Times

54 Pages Posted: 7 Mar 2017 Last revised: 10 Mar 2017

Pablo Triana

ESADE Business School

Date Written: March 4, 2017


No. The infamous bailout loans granted by Europe and the IMF to Greece since 2010 did not create austerity in the country. We use official statistics to show that government spending and deficits did generally not go down in the bailout period versus other previous periods in “modern” Greece (using data as far back as 1980, just as it was ready to join the European Union and as it began to embark on the socialistic experiment of high state intervention in the economy that has never truly left her). In fact, they went up, even substantially up, both nominally and as a ratio to Greek GDP. No other prior six-year period registered higher government spending levels, with the sole exception of the period including the peak year in excess splurging of 2009 (which could commonsensically be excluded from the analysis, as it reflected most abnormal and artificial conditions). The allegedly austere bailout period, which has been blamed by so many for the economic meltdown visited on Greece during that time, in fact saved the country from bankruptcy, an instant dramatic collapse in government spending, and the insolvency of the banking sector. Say what you will about the bailouts, they prevented, not caused, brutal austerity. Millions of Greeks received a paycheck and a pension and a subsidy and saw their savings protected thanks exclusively to the bailouts. Without the bailouts, no such benefits would have taken place since the country had simply run out of other people´s money. No one else was lending to Greece anymore, thus the bailouts were the only way for the country to continue to be living beyond its means, even exaggeratedly so. The €260 billion so far lent (under extremely and uniquely favourable financial terms) have paid for accumulated fiscal deficits of at least €106 billion, a princely sum that would otherwise never have been possible. The data show that the 2010-2015 period was characterized by historically very high government overspending, a veritable span of state largesse. Those accusing the Eurozone and the IMF of inflicting pain through unbearable fiscal belt-tightening have it backwards. Never may Greece have been less austere than during this supposedly mega-austere period of time.

Keywords: Greek Debt, Greek Austerity, Greek Bailouts, Troika

Suggested Citation

Triana, Pablo, Eurozone Bailouts: Greece's Least Austere Period in Modern Times (March 4, 2017). Available at SSRN: or

Pablo Triana (Contact Author)

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034

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