As a consequence, government expenditure on interest payments fell from 13% of GDP in 1993 to less than 7% in 2001, when Greece joined the European Union. Falling inflation was also making our managed exchange rate easier to operate.
However, we were conscious that an exchange rate adjustment would have to take place at the time of joining the ERM I, so as to offset the loss of external competitiveness reflecting the previous few years of real appreciation of the drachma.