ABSTRACT
This chapter reviews the stabilization program by the PASOK government between 1993 and 1999. During that period there were strong push factors for reform: Greece was a candidate for entry into the European Monetary Union (EMU) which was conditional on its macroeconomic performance against the Maastricht Treaty criteria. The chapter presents the measures taken by the last Papandreou government. It focuses on macroeconomic policy implemented by Papandreou's successor, Costas Simitis. Prime Minister Simitis accelerated the pace of macroeconomic stabilization and succeeded in improving Greece's most crucial economic indices under conditions of relative social peace. Macroeconomic stabilization in the 1990s was necessary to secure the stability of the party system and its capacity to distribute resources. A serious effort for macroeconomic consolidation becomes inevitable if failure to stabilize the economy could provoke a crisis expected to occur within the lifespan of the government.
