Tuesday, November 20, 2012
Your Cheat-Sheet to Greece
Wall Street Journal
November 20, 2012
Another week, another euro-zone finance ministers’ meeting on Greece. Christine Lagarde, managing director of the International Monetary Fund, has flown back from Asia to attend the meeting starting later today, while European Central Bank president Mario Draghi and the European Union’s economics commissioner Olli Rehn are also due to be there.
Stop reading now if you’d prefer to be woken up when it’s all over. But if you’re interested in detail on the state of negotiations over the agreement that would release a new slice of official funding for Greece, this is the place for you.
Issue 1: Debt sustainability
Making sure that Greece’s debt will fall to manageable levels in the medium term is a crucial issue for the IMF in particular. Under past agreements, official lenders agreed that Greece’s debt would be deemed sustainable if it fell to 120% of gross domestic product by 2020. But matters have deteriorated since then, and, as things stand, we’re looking at a debt-of-GDP ratio of 144% in 2020. Here’s what’s on the table as possible ways to cut that debt load.