OECD contribution to the evaluation of the ESM financial assistance programme for Greece

This background study assesses the impact of budgetary and market reforms from the start of the Greek financial assistance programmes, identifying key driving factors and drawing lessons from the Greek adjustment programmes. It assesses the economic and social impact of structural reforms based on four empirical tools. The paper analyses the impact of Greek reforms in labour and product markets, as well as those aimed at improving the effectiveness and quality of public services and administration. Product market reforms proved slow and piecemeal compared to the labour market restructuring, which constrained the much-needed competitiveness improvements and domestic demand, while contributing to rising poverty. A large drop in public investment had a negative effect on medium-term growth. The retrospective analysis is complemented by some prospective scenarios, with a focus on supply side conditions in the economy.