In May 2010, while the rest of the Western world was busy picking up the pieces from the combined banking and real estate crises, a fiscal crisis hit Greece. The Greek government discovered it was unable to service the country's soaring public debt, which stood at 129 percent of GDP in 2009. That year, Greece’s budget deficit was 15.6 percent of GDP, while its current account deficit was 15 percent of GDP. Soon the state coffers would be depleted, leaving the 20 percent of the country's labor force that works in the public sector without compensation and numerous state-owned enterprises, public hospitals, state schools and welfare services starved for cash.
At the brink of default, Greece was saved by turning to the European Commission, the European Central Bank and the International Monetary Fund, which have since been providing loans and technical assistance to Greece. A “troika” composed of representatives of the three institutions has closely supervised the Greek government and has shared with Athens major decision-making competencies in several policy areas, including fiscal management, taxation, public administration, welfare, pensions and health care as well as labor relations.
In exchange for being bailed out twice, in May 2010 and again when a package of debt restructuring was agreed to in February 2012, the Greek government promised deep cuts in public spending, decreases in wages and salaries, increases in direct and indirect taxes, and structural reforms.