| Author (Corporate) | International Monetary Fund |
|---|---|
| Series Title | Country Report |
| Series Details | No.165/15 (26.06.15) |
| Publication Date | 26/06/2015 |
| Content Type | Journal | Series | Blog, Report, Statistics |
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At the previous review in May 2014, Greece’s public debt was assessed to be getting back on a path toward sustainability, though it remained highly vulnerable to shocks. By late summer 2014, with interest rates having declined further, it appeared that no further debt relief would have been needed under the November 2012 framework, if the program were to have been implemented as agreed. However, significant changes in policies since then — not least, lower primary surpluses and a weak reform effort that will weigh on growth and privatization — are leading to substantial new financing needs. Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable. This conclusion holds whether one examines the stock of debt under the November 2012 framework or switches the focus to debt servicing or gross financing needs. To ensure that debt is sustainable with high probability, Greek policies will need to come back on track but also, at a minimum, the maturities of existing European loans will need to be extended significantly while new European financing to meet financing needs over the coming years will need to be provided on similar concessional terms. But if the package of reforms under consideration is weakened further—in particular, through a further lowering of primary surplus targets and even weaker structural reforms—haircuts on debt will become necessary. The IMF report was part of a regular series of reports from the IMF relating to Greece, but due to the heightened profile of the Greek debt crisis in the summer, this report was noted extensively in the mainstream news sources. The crisis-ridden country needed up to €60bn of new funds over the next three years and significant debt relief to create 'a breathing space' and stabilise the economy. |
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| Source Link | https://www.imf.org/external/pubs/cat/longres.aspx?sk=43044.0 |
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| Countries / Regions | Greece |
