EBM Newsdesk Analysis
20 May 2026. Greece’s finance minister has done something politically unusual in European politics: he has defended the troika. Most of the reforms imposed by the European Commission, the ECB, and the IMF during Greece’s bailout years were, in his assessment, absolutely necessary. Not all of them. Not the implementation. Not the pace or the depth of the austerity that accompanied them. But the structural reforms themselves — the pension overhauls, the labour market changes, the tax administration transformation, the product market liberalisation — were, he argues, essential medicine for an economy that was structurally broken long before the 2010 crisis made that visible to the world.
The political courage required to say this in Greece in 2026 should not be underestimated. The troika years scarred a generation. Unemployment hit 27.5%. Pensions were cut repeatedly. GDP fell by 25% in five years — a peacetime economic contraction without modern precedent in a developed economy. The social consequences were devastating and long-lasting. Saying publicly that most of those reforms were correct is not a comfortable position for any Greek politician.
But the numbers are beginning to make the argument that politics alone cannot.
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SubscribeWhat the Data Shows
Greece is one of only five EU countries currently running a primary budget surplus. That is a striking reversal for a country that in 2009 had a primary deficit of 8.6% of GDP and was essentially shut out of international capital markets. The IMF, which co-administered the bailout programmes, published an assessment this month describing Greece’s recovery as a transformation that underscores how far its public finances have come.
The European Commission’s most recent economic forecast projects Greek GDP growth of 2.2% in 2026 — significantly above the eurozone average — driven by steady consumption and investment supported by EU recovery funds. Unemployment has fallen to levels not seen in more than a decade. Wages per employee are accelerating, with an average annual growth rate of 3.6% over the forecast period, driven partly by minimum wage hikes and personal income tax reforms. The debt-to-GDP ratio — which peaked at nearly 180% — is on a confirmed downward trajectory as nominal GDP growth and budget surpluses compound simultaneously.
These are not the numbers of a country that was crushed by reform and never recovered. They are the numbers of a country that absorbed an extraordinarily painful structural adjustment and has emerged with public finances that most European peers would find difficult to match.
What the Reforms Actually Were
The troika’s conditionality covered fiscal adjustments worth 14.5% of Greek GDP over four years — one of the largest fiscal consolidations ever attempted in peacetime. The measures included public sector salary cuts, pension reductions, VAT increases, property taxes, and headcount reductions across the public service. These were the austerity measures that generated the political fury — in Greece and across Southern Europe — that defined the early 2010s.
Alongside the fiscal measures were structural reforms to pension and healthcare systems, labour markets, product markets, and critically, tax administration. Greece’s tax collection was systemically dysfunctional before the crisis — evasion was widespread, large self-employed professionals routinely declared implausibly low incomes, and the administrative capacity to enforce compliance was inadequate. The reforms imposed by the troika built, over a decade, a tax authority capable of actually collecting what was owed. That transformation is now a meaningful contributor to the primary surpluses Greece is generating.
The finance minister’s distinction is important: the structural reforms were necessary. The accompanying austerity — in its depth, its pace, and the front-loading of cuts before growth could compensate — is a separate and genuinely contested question. The same debate about whether fiscal consolidation kills growth or enables it runs through every European economy now navigating the combination of high debt, high rates, and slowing growth that the post-pandemic and post-energy-shock environment has created.
The European Lesson
Greece’s experience carries a lesson for every European economy currently wrestling with structural reform. The reforms that felt politically impossible in 2010 — pension system overhaul, labour market liberalisation, tax authority modernisation — are the reforms that are now generating primary surpluses and 2.2% growth. The austerity that accompanied them was brutal and may have been mismanaged in its implementation. But the structural changes themselves were not reversible once made, and the economy that emerged is meaningfully more functional than the one that entered the crisis.
The EU’s drive toward European champions through regulatory reform and the Draghi report’s call for structural change across the bloc are asking member states to make politically difficult decisions about industrial policy, competition law, and capital markets. The Greek experience suggests that politically difficult structural changes, once made, can produce durable economic improvements — even if the transition is painful enough to define a political generation.
The minister is right that most of the reforms were necessary. He is also right, implicitly, that the timing, sequencing, and social protection accompanying those reforms were not always adequate. Greece has recovered. The debate about whether it had to suffer as much as it did to get here has not been resolved — and probably never will be.
What Comes Next
Greece’s current trajectory is positive but not unconditional. The energy shock flowing from the Iran conflict is pushing inflation higher across Southern Europe — Greece forecast at 2.8% in 2025, declining slowly to 2.3% in 2026 — and the ECB rate hikes being priced by markets will increase debt servicing costs for a country that still carries one of the largest debt-to-GDP ratios in the eurozone, even as that ratio trends downward. The recovery is real. Its durability depends partly on the external environment remaining manageable — which, in May 2026, is not a given.
A country once described as Europe’s cautionary tale is now running primary surpluses and growing faster than the eurozone average. Its finance minister is defending the medicine. The fact that he can say so without immediately losing office is itself a measure of how far Greece has come.
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