Although Andreas Papandreou and Simitis were members of the same political party, the election of Simitis signaled major domestic and foreign policy changes. During the first months Simitis pursued reforms that contradicted Papandreou's socialist vision. Simitis and his associates, while still professing socialist ideals, adopted pro-Western and promarket policies. Late Premier Andreas Papandreou's son, George Papandreou, stated that the new policies reflect "the liberal American tradition."
The Greek economy experienced marked difficulty in the early 1990s. Simitis responded by sharply reducing government spending to control the deficit and inflation. By the end of 1998, inflation had been reduced to 4%. Furthermore, the economy is now showing signs of growth. By mid-2002, Greece's growth rate had nearly reached 3.8% and was expected to continue to grow (to an estimated rate of 4%) due to an influx of European Union (EU) funds, as well as projects slated for the 2004 Summer Olympics scheduled to be held in Athens.
Early in his administration, the Simitis government implemented a net-worth tax program to improve tax collection. In September 2002, Simitis introduced further tax reforms that raised the amount of tax-free income individuals and families could earn in an effort to promote a more equitable system of taxation.
Simitis's economic policies emphasize austerity, monetary rigor, and privatization. He favors austerity measures to bring Greece's economy in line with those of its EU partners. He also wants to partially privatize the national telecommunications company and the national petroleum corporation, and to push for the compilation of EU-funded public works. He has promised to reduce red tape in order to attract more foreign investors.
Simitis also hopes to sweep away the sprawling and inefficient bureaucracy and replace it with meritocracy. He tackled the patronage system by cutting unnecessary jobs in the civil service and public sectors and ordered his economic minister to eliminate at least 15,000 civil service jobs over the next three years and make deep cuts in local government spending.