In terms of real GDP growth, the Greek economy has performed very well in recent years and has weathered the international slowdown in activity better than most OECD countries. However, in part this has been achieved at the cost of a sharply widening fiscal deficit to very high levels and high and rising public indebtedness. Hence, a major challenge of economic policy will be to rein in government deficits to meet European obligations and to prepare for the spending pressures that will start emerging after 2015 arising from an ageing population and an actuarially unsound and largely unreformed public pension system. The growing cost of the public health system will also add to the pressures on the government budget. Further policy challenges arise from the government’s objective to narrow the gap in living standards between Greece and the European Union, which had widened from the...