The Troika Period Reconsidered
The importance given constantly to debt sustainability exercises by the official lenders of Greece at this point underlines, above all, the importance of the debt-to-GDP ratio as it juxtaposes all the malfunctions and short comings of both the private economy and state apparatus. During the period of strong growth, the denominator in the ratio could maintain acceptable projections for the dynamics of the public debt, especially given the low interest rate environment that was secured by euro area membership. However, in spite of these appearances, government expenses started rising at a faster rate, as a percentage of GDP, after 2003 gradually eroding the long-term projections of the public finances.
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