As regards economic policy, he had to confront the consequences of the 1893 bankruptcy and the
1897 war, the most important among them being the establishment of the International Financial Control Commission.
However, the economic situation began to gradually improve until 1901. This was
the result of a relative government stability, the restriction of military expenses
and the temporary abatement of the irredenstist aspirations of the country's foreign
policy. Also, the major public works schemes of the time, especially the railways
and the Corinth canal, brought profits and had a considerable
impact on the economic development of the country.
Even the action of the International Financial Control Commission had a positive effect chiefly on public
finance, because it secured a relatively rational management.
After 1905, the issue of army reorganization, on which Theotokis had focused,
gradually burdened the public treasury by increasing expenditure on defence. Thus, the public
deficit increased, while taxation burdens were unevenly distributed at the expense
of the lower socio-economic strata. However, the geopolitical developments in the area
and the Macedonian struggle in particular rendered these expenses essential.