Monday, November 5, 2012

IMF and EU face tough choices on Greece debt

November 8, 2012

Greece has moved a step away from bankruptcy with parliament's approval of new reforms, but its debt pile still threatens its solvency and its international creditors have yet to agree even how big it is.

Inspectors from the European Commission, the European Central Bank and the International Monetary Fund -- together known as the troika -- have been in Athens on and off since July trying to establish whether Greece will ever be able to pay back everything it owes.

With total debt estimated at 175 percent of GDP and forecast to rise to nearly 190 percent next year, it is extremely unlikely that the government will be able to reduce the ratio to 120 percent by 2020, the level the IMF has said is the maximum for debts to be sustainable in the long-term.

Reuters reported in July, on the day the troika returned to Athens, that Greece was way off-track in meeting the goal, with the first estimates by the troika showing the debt would be at least 130 percent of GDP in 2020.

Three months on, there is no evidence that the situation has improved, with officials telling Reuters the IMF and European Commission have made widely differing calculations, even if both acknowledge that the 2020 goal won't be reached.


No comments: