After the formation of the eurozone, Greek borrowing costs and debt service charges fell by more than half. It could have been the opportunity for a substantial fiscal consolidation. Instead, Athens let its tax revenue decline. The primary surpluses evaporated and the deficit expanded to 5.5 percent, twice the Maastricht limit. This was bearable only because nominal income growth was so rapid.33 What made Greece’s situation dangerous, however, was not the pace of borrowing after 2001 but the debts built up in the 1980s and 1990s,
