Factsheet A BRIEF HISTORY OF GREEK DEBT In 2009, Greece’s ballooning budget deficit raised concerns about the sustainability of the country’s debt. This triggered a crisis that lasted almost a decade. It led to three adjustment programmes agreed with the European Commission, the ECB and the International Monetary Fund(IMF), led to the largest sovereign default in history, cost around a quarter of Greek GDP and pushed the unemployment rate to a peak of 28 per cent. Given that Greece’s general government debt has exceeded 350 billion euros in recent years and the debt-to-GDP ratio reached 160 per cent of GDP in 2023, the question is often asked whether the country is still vulnerable and at risk of another crisis. This paper outlines the reasons why the current situation is different from 2009. It also presents the key variables that show that Greece’s public debt is not such a pressing concern as long as prudent fiscal policies remain in place. BACKGROUND In the aftermath of the 2008 global financial crisis, Greece’s public finances deteriorated rapidly in 2009. Revenues fell sharply and the conservative New Democracy government appeared to make little effort to control spending. This led to a final budget deficit of more than 15 per cent of GDP for that year. The centre-left PASOK government, which came to power in the last quarter of 2009, revealed that the previous government had perpetrated a number of statistical irregularities. This created an explosive combination of unsustainable fiscal position and credi­bility risk. These factors attracted the attention of the markets, which were already looking for vulnerabilities around the world as the effects of the financial crisis unfolded. In this difficult environment, the Greek government had to issue significant amounts of debt to meet bond maturities and finance its budget deficit in the years immediately following 2009. With investor confidence severely shaken by the infamous»Greek statis­tics«, Greece lost market access in early spring 2010, leading to the hasty adoption of bailout programmes. General Government Debt, Annual, as% of GDP 250 200 150 100 50 0 1995 1999 2003 Source: Hellenic Statical Authority(ELSTAT) 2007 2011 2015 2019 2023