IMF NEWS

Greece was once Europe’s cautionary tale—shut out of markets, reliant on external financial support, and collecting too little tax to finance public services and support economic growth. Today, it is one of only five European Union countries running a primary budget surplus. This is a striking reversal that underscores how far its public finances have come. The shift reflects, in no small part, a transformed tax administration that has steadily closed compliance gaps and rebuilt fiscal credibility—one of the quiet engines behind Greece’s broader economic recovery.

The IMF’s latest annual health check of the Greek economy (the Article IV consultation) finds that the country is well positioned to cope with external shocks, including those stemming from the war in the Middle East. This reflects strengthened fiscal sustainability and financial stability. The primary surplus rose to nearly 5 percent of GDP in 2024-25, while the public debt-to-GDP ratio has fallen by about 65 percentage points from its 2020 peak. Financing conditions improved in parallel, with sovereign spreads returning to levels last seen before the 2008 global financial crisis.

The reform agenda is not finished. But the scale—and sequencing—of Greece’s turnaround offers valuable lessons for other countries pursuing tax reform. New IMF work in this area highlights two core insights. First, governments cannot deliver on their fiscal reform goals unless taxation is fair, credible, and transparent. Second, building these capabilities can take time. In Greece, reform unfolded in three mutually reinforcing phases—stabilization (2010–12), institution building (2013–17), and digital transformation (2018–25)—supported throughout by IMF capacity development.

2010-2012: Stabilization

Facing imminent economic collapse, Greece requested financial assistance from what became known as the Troika—the IMF, the European Commission, and the European Central Bank. Early tax administration interventions focused on stabilizing revenue flows and laying the groundwork for deeper reforms. These included an anti-tax-evasion plan, targeted programs to improve revenue collection from large taxpayers and wealthy individuals, and a medium‑term reform roadmap.

One early success was the digitalization of value‑added tax (VAT) filing. By 2014, 96 percent of registered taxpayers were filing VAT returns on time, up from 65 percent in 2010. Other initiatives—especially efforts to strengthen collection from large corporations, wealthy individuals, and tax debtors—proved harder to sustain, revealing the limits of reforms that did not sufficiently address governance and political interference.

2013-2017: Building durable institutions

The second phase of Greece’s reforms underscored a critical lesson: tax administration reforms cannot perform effectively without autonomy, clear accountability, and strong leadership.

Beginning in August 2012, Greece consolidated its tax office network, reducing the number of local offices from 288 to 119 in just over a year, and reorganized operations around functions rather than geography. As revenue collections improved—thus reinforcing the political will required to continue reforms—the next step involved granting greater autonomy to the tax authority.

A landmark law in 2016 transferred responsibility for tax administration to a new, independent authority with its own budget and governance framework. The law also established that the tax administration’s management board and governor be selected through an open competition with clearly defined criteria. The Independent Authority for Public Revenue became operational in 2017, giving Greece a tax administration insulated from political interference and focused on results.

The impact was tangible. During this period, the tax-to-GDP ratio rose by 1.8 percentage points, from 25.8 percent in 2013 to 27.6 percent in 2017, reflecting stronger compliance and improved institutional capacity.

2018-2025: Digital transformation

While digital tools had been introduced earlier, the decisive push came after the institutional foundations were firmly in place. By this stage, the tax administration had the governance, skills, and credibility required to make digitalization stick. Between 2020 and 2025, in part in response to the pandemic, Greece rolled out an integrated suite of digital systems—from back‑office analytics to real‑time electronic invoicing and point‑of‑sale connectivity.

These reforms made compliance easier for taxpayers and provided auditors with sharper tools to identify risks and target enforcement where it mattered most.

The results were clear. VAT compliance improved significantly, with VAT revenues increasing by 2.4 percentage points of GDP over 15 years, from 7.1 percent in 2010 to about 9.5 percent in 2025.

A virtuous cycle—and lessons beyond Greece

Taken together, Greece’s reforms created a virtuous cycle: better governance enabled digitalization; digitalization improved compliance; higher and more reliable revenues reinforced public trust and fiscal credibility. By 2025, Greece’s tax-to-GDP ratio had climbed to 28 percent in 2025, up from 20.5 percent in 2009. While revenue growth also reflects broader economic and policy changes, improvements in tax administration played a central role by broadening the tax base, strengthening enforcement, and increasing trust in the system.

The journey continues. The next challenge is to make the recent gains durable—by embedding new ways of working deeply into day‑to‑day processes. Priorities include using analytics and artificial intelligence more systematically to manage compliance risks, further improving taxpayer services and trust, and ensuring that skills and staffing keep pace with rapid technological change.

Though in some ways unique, Greece’s experience offers a profoundly valuable and widely-applicable lesson. Sustained effort—grounded in good governance, careful sequencing, and investment in people—can turn crisis response into lasting institutional strength.

*****

Andrew Okello is a division chief, Stoyan Evtimov Markov is a senior economist, and Chenghong Wang is an externally financed appointee, all in the IMF’s Fiscal Affairs Department. They co-authored the IMF note, Tax Administration Reform in Greece: Outcomes and Lessons (2010–25), with Elli-Sivylla Gregou of the Independent Authority for Public Revenue of Greece.