Another “timely” report is leaked (or “released”) by the IMF which continues to push for a Greek debt write down…something Germany and Angela Merkel have repeatedly refused to even discuss or acknowledge.
Taking into account Greece’s growing financial needs, its debt situation is “unsustainable,” according to the latest IMF projections contained in a confidential report obtained by Reuters. The new data, sent by the IMF to EU governments late on Monday after a new Greek bailout plan was agreed upon in principle, states that the 86-billion-euro program will not save Greece from financial collapse.
The updated debt sustainability analysis, which is said to have been released by the fund now that several media outlets have leaked the data, calls for a considerable portion of the Greek debt to be written off.
“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed by the ESM [European Stability Mechanism bailout fund],” the IMF paper says.
European creditors should either write down a massive amount of Athens’ debt or give Greece a 30-year grace period if they want it to recover and repay, according to a Reuters’ report citing International Monetary Fund (IMF) officials and a secret study.
Greece is in need of much greater debt relief than European governments are willing to acknowledge, and this measure is needed to let the Greek economy recover, a senior IMF official told Reuters late on Tuesday.
“I don’t think this is a gimmick or kicking the can down the road…This is a dramatic measure to take the entire European stock [of debt] and reprofile it,” for Greece to have a chance of “getting some growth back,” the official said on condition of anonymity.
For the IMF to remain involved in financial aid for Greece, its debt must be deemed “sustainable” by the fund – something which the latest study does not believe possible.
“Borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades,” the paper says, challenging the assumption voiced by some European officials that in 2018 Greece will already be able to meet some of its financing needs by going to the markets.
The publication of the IMF report comes on the heels of other disclosures, such as German Finance Minister Wolfgang Schaeuble revealing that some members of the government in Berlin would have preferred that Greece take a “time-out” from the eurozone rather than give it another bailout.
Meanwhile, the new debt sustainability figures for Greece had reportedly been given to European finance ministers on Saturday – well before the Monday deal was concluded.
The timing of the leak coincides with Greek Prime Minister Alexis Tsipras’s attempt to convince his parliament that accepting the deal is the only option if Greece is to remain in the euro and avoid economic collapse.
Tsipras gave a live TV interview defending the deal ahead of Wednesday’s parliamentary session that is to decide the issue. The outcome of the vote is far from certain, with many of the Syriza leader’s fellow party members unhappy with the new bailout plan.
While revealing he “does not believe in” the bailout plan, Tsipras argued that the deal was the only way for Greece to stay in the EU – something that he said was a “one way street” option imposed on the Greeks. However, he claimed that he had still managed to win certain concessions such as avoiding wage and pension cuts and securing ‘fresh money’ from European states.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.