No reason for alarm over Greek debt

There is 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 International Monetary Fund (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 (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 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 subsidized 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 percent of gross domestic product (GDP) by 2060, against 160 percent now, according to the IMF report, which is due to be discussed by member states on Feb. 6.
Months of bickering have delayed progress on Greece’s €86-billion-euro ($92.4 billion) bailout program 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 favorable 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 program, which is credible and backed by contingency measures in case of unforeseen events,” he said.

Source: Arab News