Wednesday, November 30, 2016
Eurozone Bailout Fund Proposes Short-Term Debt Relief for Greece
Wall Street Journal
November 30, 2016
Confidential proposals drawn up by the eurozone’s bailout fund could reduce Greece’s debt load by about a fifth in 2060.
A six-page document, dated Nov. 25 and seen by The Wall Street Journal, was produced by the European Stability Mechanism, the Luxembourg-based eurozone bailout fund. It outlines measures that could be taken in the near future to reduce Greece’s large debt load.
The paper proposes to ease Greece’s debt load by extending some maturities and locking in the interest on some of Greece’s loans to shield it from future interest-rate increases.
The cumulative impact of these measures in 2060 would cut the ratio of debt to gross domestic product by 21.8 percentage points.
An official eurozone analysis in May projected debt-to-GDP of 104.9% in 2060, under a baseline scenario in which Greece fully implements its bailout program.
“This is an ESM working document that has not yet been endorsed by the euro area finance ministers. The document comes in response to the mandate the ESM was given by [euro area finance ministers] on May 25 to work for the short-term on a first set of measures to improve the debt sustainability for Greece,” an ESM spokesman said.