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debt sustainability a Central point of contention between the IMF and the Euro countries
Dhe International monetary Fund (IMF) classifies Greece’s debt load as the currently “unsustainable” and in the long term “explosive”. “Even in the case of a full implementation of the (rescue)program reforms endorsed by the state debt and the financial requirements in the long term, explosive,” – said in a confidential IMF report, the news Agency AFP on Friday that was about it. In order to reduce the debt mountain in the country, must take the Eurozone “credible” action.
The report on Greece’s debt sustainability to be presented to the IMF’s member countries at the beginning of February. The IMF makes use of the long-term sustainability of the Greek debt, his involvement in the multibillion-dollar rescue package for the Mediterranean country.
If no additional measures would be taken, would the debt level to 275 percent of the country’s economic output (GDP) increase, says the IMF report. Therefore, the payment would have to be deadlines and due dates be extended, otherwise it could not succeed, the debt-to guide Greece to a “downhill” path.
Specifically, it proposes that the IMF, Greece in 2040 from repayment obligations is exempt and the maturities of the loans until 2070 to expand. EU economy Commissioner Pierre Moscovici said that the EU Commission will work “with Greece, the Eurozone countries and other institutions, the Greek debt”. The economic performance of Greece has decreased since 2008, by around a quarter, the unemployment rate is more than 20 percent.
At the Meeting of Eurozone Finance Ministers in Brussels on Thursday there had been no progress in the tug-of-war to reform commitments by Athens, and the long-term sustainability of its debt. The Euro partners had agreed in mid-2015 with the highly indebted Greece and a third bailout program by up to 86 billion Euro. Unlike the predecessor programs, the IMF is not involved with its own financial resources. Germany is, however, that the IMF needs to be involved in further rescue measures for Greece.
Against the Background of the disagreement between the Eurozone and the IMF, a routine Review of the aid program by the creditors has been delayed for months. Euro group chief Jeroen Dijsselbloem said after the Meeting in Brussels, a faster completion of the second Review was in the “interest of all”.
French Finance Minister Michel Sapin noted that “in mid-2017″ in significant repayment obligations for Athens are not forthcoming. All were, however, trying “to find a solution quickly”, because in several EU countries, elections are not forthcoming.