Austerity measures are employed by governments to shrink budget shortfalls during hostile economic conditions that might include spending cuts and tax increases.
(WATCH VIDEO: Partnerships key to Greece's structural reforms)
“From mid-2012 onwards Greece bonds have migrated lower which is a sign of stabilisation. The market has been rewarding Greece bond yields that had collapsed completely,” George Glynos, managing director at ETM analytics told CNBC Africa.
“It’s in the midst of a crisis that hard decision making is needed and tough adjustments are made. Both on the social and financial crisis, Greece has been through a nightmare in the past six years,” he added.
The troubled European Union nation has experienced strikes and suicides as citizens struggled to cope with the harsh economic climate, but recent indications suggest the country could be heading towards the right direction
Towards the end of 2011 going to 2012 with conversation of a Greece default and the country leaving the Eurozone, political leadership made tough decisions among them were huge amounts of austerity and reorganising of the fiscal space.
Greece is currently experiencing a primary budget surplus, the first time in almost a decade which is a massive reversal and there are reports that they are planning to increase the surplus further.
Glynos added that most economies, when run badly, create a picture that they will never recover but when good decisions are made countries often recover.
“It's political choices that led them into the crisis that they were in but now we are seeing sound economic decisions pulling them out of the crisis. Politicians should not make decisions that pander to popular sentiments but rather decisions that make financial sense,” Glynos said.
At one point Greece was employing over 50 per cent in the formal sector a scenario that Glynos warned South Africa should avoid.
“We hope that our local politicians are paying attention to the example of Greece as this is not the right path”.
BY TRUST MATSILELE