Greek debt gives headaches to creditors
On two occasions recently the Greek Government has been disowned by his creditors when he announced the conclusion of an agreement on the fiscal consolidation of the country. It is believed however that the agreement exists. The problem lies elsewhere, the worsening of the debt.
Four years after the beginning of the international financial crisis started in 2008 at the United States, the Greece finds himself in a situation of debt much worse than at the start of the off-grade international rescue plan launched in May 2010 to avoid bankruptcy and a break-up of the eurozone.
The Greece having benefited from two credit lines of some 240 billion euros in total on the part of the EU and the IMF, mechanically, she saw its debt grow. And this especially as the economic fundamentals of the country are crumbling and that the privatization program, meant to help the country to absorb it, took a huge delay.
The Greek case is going to be a major topic of discussion at the meeting of Finance Ministers and Governors of the central banks of the g-20 Sunday and Monday in Mexico City, was reported Thursday from German source. 129% Of GDP in 2009, the debt will end the year 2012 around 170% of GDP, which fall. The country has plunged into a recession that takes great depression tunes (-7%), with the indicators of unemployment and industrial production to dark red.
The forecast long-term Greek debt is negative or even alarming, putting out of reach the objective of a debt at 120% of GDP by 2020, set by donors last winter when the second loan agreement signing. In its last report published in early October, the IMF estimates Greek debt will amount to 170.7% of GDP in 2012, that it will culminate at 181.8% in 2013, and then will gradually cool up to 152.8% of GDP by 2017. A trial already much too high figure by the Fund.
In any case, as said French economist Elie Cohen (CNRS), passage to Athens this week to talk about the crisis of governance within the eurozone, “person cannot imagine that the Greece can pay off a debt of 170% of GDP.» “Everyone knows that the debt burden will fall on a number of European countries and that the public sector [institutional lenders] will have to pay”, he said before a packed amphitheatre. “There will be a restructuring of debt”, he added, estimating that the Germans ‘wish that this is happening as late as possible”, preferably after their planned late 2013 parliamentary elections.
The Greek Government has published Wednesday forecast even more black making a bomb, on the sidelines of the presentation of the 2013 budget to Parliament. According to the draft Bill, entitled ‘framework strategy of public finances in the medium term (2013-2016)’, ‘the progress of the debt will be blazing without [appropriate] interventions weighing on the sustainability of debt’ and inflating the wire water until 220,4% of GDP in 2016, after 175,6% expected in 2012 and 186.5% in 2013. In absolute numbers, everything explodes: EUR 329,5 billion in 2010, it will peak at 411,9 billion in 2016, figures which show the way that the restructuring of debt held by private creditors (PSI), which was held in March, was essentially used to contain debt soaring more than to reduce.
While the Governments of the euro zone for now assert in unison is not question of restructuring Greek debt, which would lose their implementation to the European taxpayer and would exacerbate tensions, economists are considering all scenarios. “There are lots of how to design an operation of this type” to allow the Greece to remain in the euro area, said Elie Cohen. “It’s DIY, can lower interest rates, lengthen the maturities” without deletion.
A reduction in the rate would fall to 125% of GDP, but not before 2022, according to a calculation of Platon Monokroussos, Chief Economist of Eurobank. Another assumption, a takeover of 30 billion of debt by the Greece, but it would also a passage under the 120% of GDP than in 2022.
In addition to the g-20 meeting in Mexico City, the Greek question is also at the centre of discussions by Finance Ministers of the euro area on 12 November, a meeting crucial for Athens waiting for the release of a vital EU – IMF loan tranche, delayed for months.
“In the meantime, Alexis Tsipras, leader of the Greek radical left, the main party of the opposition in Greece, campaigned for the Organization of an international conference with a view” to cancel”purely and simply a large part of this debt, on the model of what the Germany has experienced after the second world war.
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