Unless we fix it, our debt will be a problem, says Greece

October 12, 2016 10:02 AM EDT

Greek Economy Minister George Stathakis arrives for a meeting with representatives of the International Monetary Fund, the European Commission, the European Central Bank and the eurozone's rescue fund, the European Stability Mechanism, at a hotel in Athen

News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.

By Lefteris Papadimas

ATHENS (Reuters) - Greece called for a swift resolution of its debt crisis on Wednesday, saying its debt mountain would remain unsustainable even in a post-recession era with healthy rates of growth.

The crisis-hit country has been lobbying hard to get its debt, which at 176 percent of GDP is the highest in the euro zone, back to manageable levels. International lenders agree to the idea, but have yet to agree how it will work.

Speaking to Greek lawmakers, Economy Minister George Stathakis said it was "broadly acknowledged" the debt pile would remain unmanageable even if the country met projections of a growth in output of 2.5 percent, inflation close to 2.0 percent, and recorded surpluses.

"Insofar that these assumptions are real, and are incorporated into the viability of debt - if we take all that into account - Greek debt is, in spite of all of that, non-viable," Stathakis said.

Greece is pinning hopes on a deal following the conclusion by lenders of a second review of economic reforms required under its latest multi-billion euro bailout. Athens and representatives of lenders formally start talks on the second review next week.

In May, euro zone government offered Greece debt relief in 2018, when the current bailout accord expires.

They did not specify how it could be done, partly because of Germany's view that no immediate remedial action is required, and the position of the International Monetary Fund that decisions are required now.

Stathakis, a close associate of Greek Prime Minister Alexis Tsipras, said Greece could benefit from an extension of maturities on longer-term debt, smoothing out bumps in its repayment schedule and refinancing existing debt to the EU at lower interest rates.

Details of how a debt restructure will work have to be based on a debt sustainability analysis, and such a report will only be possible after Greece passes reviews on its reform progress.

"Decisions on debt need to be taken now," Stathakis said. "... The debt sustainability analysis which the IMF must do ... must be concluded by Christmas."

The IMF has indicated it can only participate in Greece's latest bailout, brokered in mid-2015 and worth up to 86 billion euros, if its debt is sustainable. The Washington-based lender of last resort believes debt relief for Greece is essential.

(Writing by Michele Kambas; Editing by Alison Williams)

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories


Add Your Comment