finance the real economy. resolving the greek crisis took eight years, three economic adjustment programmes, major debt restructuring and three rounds of bank recapitalisation. several factors can explain the length and depth of the greek crisis : first, the size and speed of fiscal consolidation were unprecedented. this primarily had to do with the fact that the initial macroeconomic imbalances were much higher in greece than in other member states under financial stress. second, the fiscal multipliers turned out to be higher than initially anticipated, aggravating the recession. as a result, the economy was soon caught in a vicious circle of austerity and recession. third, given the size of the initial fiscal imbalances, more emphasis was initially placed on tax hikes rather than expenditure cuts, growth - enhancing reforms, privatisations, tackling tax evasion 1 / 11 bis central bankers'speeches and reorganising the public sector. fourth, the idiosyncratic sequencing of structural reforms led to real wages declining more than initially planned, deepening the recession. the reform effort focused much more on the labour market than on goods and services markets. hence, nominal wages declined faster and more strongly than prices. households experienced a massive drop in purchasing power, which, in turn, constrained personal consumption and deepened the recession. fifth, the non - performing loans ( npl ) problem proved more difficult to manage than initially anticipated. mainly the result of economic contraction, it was further exacerbated by legislative changes such as the blanket moratorium on primary residence auctions and the abuse of foreclosure protection ( under law 3869 / 2010 ), as well as several other legal and judicial impediments. a more dynamic response during the first years of the crisis, by implementing the necessary legislative changes much earlier and introducing a centralised asset management framework for npls as other member states have done, could have reduced the problem we face today. sixth, certain reforms fell behind the agreed time schedule due to several factors, including : insufficient ownership of the necessary reforms ; populist rhetoric, rivalry and failure of the political parties to reach an understanding ; and the resistance of various – small and large – vested interests to reform. seventh, political economy deliberations in the euro area also played their part in delaying the recovery of the greek economy. the eurogroup decision of november 2012 to grant further debt relief was put off for several years and was implemented only in june 2018. this undermine

regulatory quality affect incentives for people and businesses to invest in physical and human capital, technology and the organization of production. therefore, particular emphasis should now be placed on improving the public administration, implementing the land registry, strengthening institutions, cutting red tape, lowering the regulatory burden and ensuring the predictability and stability of legislation, reducing entry barriers into network industries, retail trade and professional services as well as on enhancing judicial efficiency. moreover, with regard to independent authorities, it is important to strengthen their administrative and financial autonomy and ensure respect for their independence, as well as accountability towards parliament. 3. adopting a growth - friendly fiscal policy mix. the over - performance relative to the fiscal policy targets over the past three years strengthened fiscal policy credibility, but it came at a cost, i. e., lower economic growth. this is due to the high reliance of the fiscal policy mix on tax policy measures and tax rate hikes. according to the global competitiveness index 2017 – 2018, greece ranks last and second to last as regards the adequacy of the tax system to provide incentives to invest ( 137th out 137 countries ) and to work ( 136th out of 137 countries ). high tax rates actions encourage the shift of activities towards the shadow economy and provide incentives for tax evasion. hence, the fiscal mix is not sustainable and must change. more emphasis has to be placed on cutting non - productive expenditures, increasing the public sector efficiency, including the management of state property and improving the tax administration. these actions will lead to a fairer distribution of the fiscal burden and will facilitate the reduction of the excessively high tax rates. 4. tackling the problem of non - performing exposures / loans ( npes / npls ) and strategic defaulters which constrains the banking system ’ s ability to finance economic growth. the npe reduction targets for the next two years are ambitious compared to last year, implying that banks will need to step up their efforts and make full use of the available toolkit for private debt resolution. moreover, banks will be facing new challenges in 2018, most notably the implementation of ifrs 9, stricter treatment of loan - loss provisions, as well as the eu - wide stress test to be conducted by the ecb. thus, banks need to step up their efforts to attain their operational targets for reducing their npls and, ideally, over - achieve them now that the economy has returned to positive growth. in this context, they need to broaden