Greece is on the path to fiscal order, but accusations of graft dim its future

A decade after avoiding 'Grexit', progress is being made, Kyriakos Pierrakakis, minister for national economy and finance, tells

- Barney Macintyre

Ten years ago Greece was teetering on the edge of financial oblivion.

In a referendum on 5 July 2015, the Greek people voted, overwhelmingly and in defiance of Europe, to reject the terms of a new bailout to stop their country defaulting on an IMF debt repayment of €1.6bn (£ 1.4bn).

Yanis Varoufakis, finance minister for the left-wing Syriza government, quit the next day. Bank closures and capital controls were extended. Analysts put the chance of “Grexit” at 50:50 and German ministers began openly discussing contingency measures if the country left the eurozone. Leaks to the press suggested they thought Greece was no longer “systemically relevant” to the euro.

What chaos “Grexit” could have wrought we will never know. The game of chicken ended a week later, after an all-night summit at which a third bailout was agreed. A decade of hardship, austerity and social upheaval followed.

And now? “It’s interesting that four of the six countries that have a primary surplus in the EU are countries that implemented bailout packages in that decade,” says Kyriakos Pierrakakis, who now holds Varoufakis’s former post as minister for the national economy and finance. “These are countries that metabolised their collective trauma into sound policies.”

At a time when fiscal challenges plague the US and UK, southern European countries, including Greece, Spain and Italy, are winning plaudits for managing down their debt, having narrowed the gap with Germany's benchmark borrowing costs to their lowest in a decade.