Tuesday, October 17 2017

VietNamNews

No reason for alarm over Greek debt: ESM

Update: January, 29/2017 - 09:40
According to an IMF report, Greece’s government debt remains highly unsustainable and will be "explosive" in the long run, requiring a more credible debt relief plan from Europe. Photo www.geo.tv
Viet Nam News

BRUSSELS —  There’s no need for alarm over Greece’s debt levels, a spokesman for the EU’s rescue fund body told AFP Saturday, the day after a leaked IMF report described the problem as "explosive".

"We see no reason for an alarmist assessment of Greece’s debt situation," said the spokesman for the Luxembourg-based European Stability Mechanism, or ESM.

"We believe that Greece’s debt burden can be manageable, if the agreed reforms are fully implemented," he added.

His words were in contrast to the tone of a confidential International Monetary Fund (IMF) report obtained by AFP on Friday.

According to that report Greece’s government debt remains highly unsustainable and will be "explosive" in the long run, requiring a more credible debt relief plan from Europe.

Even with full implementation of the economic reforms the country has agreed to, the Greek government will have to replace highly subsidised official financing with market financing at much higher rates, the IMF said.

The pessimistic report, although in keeping with the fund’s repeated statements on the topic, makes it less likely the IMF will participate in any new European loan deal for Greece.

Without measures to ease the debt burden it will reach 275 per cent of Gross Domestic Product (GDP) by 2060, against 160 per cent now, according to the IMF report which is due to be discussed by member states on February 6.

Months of bickering have delayed progress on Greece’s 86-billion-euro (US$92.4 billion) bailout programme agreed in 2015 and officials are increasingly worried that elections this year in the Netherlands, France and Germany could further poison the efforts.

The ESM spokesman on Saturday refused to comment directly on the IMF report but stressed that Greece been granted "exceptionally favourable loan conditions over the long term" and had recently adopted short-term debt relief measures.

"Greece and the Europeans agreed on an ambitious fiscal path during the programme, which is credible and backed by contingency measures in case of unforeseen events," he said.

Europe has made "clear commitments to support Greece with additional debt relief" if necessary, as long as Athens implements the agreed reform programme, he added noting that Greece’s fiscal outcome for the past year was "better than expected". — AFP

 

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