BRUSSELS Greece’s public debt might be manageable, the euro zone bailout fund mentioned on Sunday, responding to a leaked report by the International Monetary Fund that the nation’s debt will explode to 275 p.c of GDP by 2060.
A spokesman for the bailout fund, the European Stability Mechanism (ESM), mentioned the trail for Greek public funds agreed between Athens and the euro zone was credible and backed by contingency measures in case of unexpected occasions.
“We believe that Greece’s debt burden can be manageable, if the agreed reforms are fully implemented, thanks to the ESM’s exceptionally favorable loan conditions over the long term and the recently adopted short-term debt relief measures,” the ESM mentioned.
In the doc, seen by the Financial Times, the IMF calculated that Greece’s debt load would attain 170 per cent of gross home product by 2020 and 164 per cent by 2022. But it will turn into explosive thereafter and develop to 275 per cent of GDP by 2060, the paper quoted the report as saying.
The spokesman mentioned, nonetheless, that the euro zone had promised to supply Greece further debt aid if Athens delivers on all its reform guarantees.
“As a result, we see no reason for an alarmistic assessment of Greece’s debt situation,” the spokesman mentioned.
The IMF has lengthy been calling for substantial euro zone debt aid for Athens, however Germany, which faces elections this yr, has been strongly against such a transfer till after 2018, when Greece is to complete all its promised reforms.
The IMF evaluation of Greek debt developments could make it inconceivable for the Fund to hitch the present bailout for Greece, now shouldered solely by euro zone governments, as a result of the fund’s coverage is to enter applications which in the long run permit a rustic to manage by itself.
Euro zone governments need the IMF on board, however don’t appear to be prepared to offer the debt aid to Greece that’s mandatory for the Fund to hitch.
(Reporting By Jan Strupczewski; Editing by Stephen Powell)