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IMF Warns Eurozone That Greece Needs Far More Debt Relief
Keywords:
A 3 page July 14, 2015 update on the IMF's July 2015 debt sustainability analysis paper on Greece, points to severe damage to the Greek economy in the last year, especially under the uncertainty and closing of the banking system, making debt unsustainable without haircuts or extension of maturities and grace periods. About 85 billion euros is the additional financing needed as a result of the mismanagement under the Syriza government and closing of the banking system. It draws the conclusion that "haircuts could be avoided if instead there was a significant further extension of the maturities of the entire stock of European debt (GLF, EFSF) , in the form of doubling of grace and repayment periods, with similiar concessional terms on new financing." The paper adds that the maturity extension would have to be "very dramatic extension with grace periods of say, 30 years on the entire stock of European debt, including new assistance." One shocking part of the analysis is that within the space of one year from July 2014 to July 2015 the Greek economy went from reaching Debt to GDP ratio of 105% in 2022, to 170% after the closing of the banking system by July 12, 2015, according to the IMF. In 2014 it was at 177% of GDP.
The IMF three page paper warning on Greek debt sustainability on July 14, 2015
07/06/2015
The IMF in a 3 page paper warns that Greece's debt is not sustainable except by refinancing it at the cheapest rates and extending the maturity over an extended period such as 30 years. The alternative is for a debt haircut, says the IMF paper. Germany says it will consider extending the date maturity after implementation of reforms.
Grouped Articles
IMF Warns Eurozone That Greece Needs Far More Debt Relief
Wall Street Journal 07/15/2015
How to Undo the Damage in Greece
New York Times 07/06/2015
Personalities Clashing Over How to Handle New Greek Bailout
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Two thirds of the $177 billion in bailout loans to Greece since May 2010 from the IMF, ECB and EC actually went back to these creditors. The money route was setup in circular fashion with escrow accounts in Athens so that the money went right back as interest payments on debt.
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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What Greece won in the negotiations and what Greece loses with the failure of talks with the EU, closing of banks, and the referendum in July 2015
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The different options facing Greece following the referendum in July 2015
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With Greek ‘No’ Vote, Tsipras Wins a Victory That Could Carry a Steep Price
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Germany Stays Tough on Debt Relief for Greece
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The balance sheet of Greece's banks and recapitalization needs in Juy 2015- 139 billion euros in deposits, 2 billion euros in cash, and 116 billion euros in ECB central bank aid
07/04/2015
In the Cyprus crisis overhaul of the banks required depositors with over $100,000 in bank accounts to take a 50% haircut. Deposits less than $100,000 were safe. Greek banks will need ECB funding or European creditors to recapitalize the banks before banks can open because cash at banks is dropping below 1 billion euros just before the referendum of July 5, 2015.
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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The EU-IMF loan deals with Greece, Ireland, and Portugal compared 2010-2013
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Athens's Love Affair With the Euro Persists
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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Brinksmanship in the EU- Greece's Syriza government negotiations just before the June 30, 2015 date for debt repayment to the IMF
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Greece’s Creditors Make Some Concessions as Showdown Approaches
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The Heat Is on Greece’s Alexis Tsipras, From Inside and Out
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Greece’s Long and Painful Odyssey
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Greece's finance minister, Gikas Hardouvelis, June 2014- Jan. 2015 under the Samaras administration, on how the crisis in Greece developed in 2014-2015
07/06/2015
Hardouvelis, a professor at the University of Piraeus in Greece, and finance minister during the last 18 months of the Samaras administration to Jan. 2015, describes how the crisis developed in 2014-2015- with the IMF seeking leverage for change in Greece, the mismanagement of the economy and negotiations by Tsipras and Syriza, and Syriza's focus on debt. He says debt is not an issue as it is easily serviceable at very low rates, a point made by Krugman in a column in April 2015, and that the economy was gradually recovering in 2014 with lower unemployment and prospects for growth. The European Commission shows in its May estimate for Greece a growth rate of 2.9% in Greece for 2016.
Grouped Articles
How to Undo the Damage in Greece
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Cutting Greece Loose Might Be a Win-Win
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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Eurozone unemployment hits lowest level in eight years | Business | DW | 31.07.2017
DW.COM 07/31/2017
The solution shift to debt sustainability for Greece, a point on which Germany, France and the IMF agree
07/10/2015
Merkel and Schauble of Germany have opposed debt haircuts for Greece in July 2015, but have left open the possibility of debt sustainability by stretching the debt over a longer period with even lower interest rates. This is the position now adopted by the IMF and France. This is also the way past debt crises have been resolved in Latin America, with haircuts emerging at a later stage when a consensus can be obtained on the issue. About 2.5% of GNP goes to paying the interest on debt and principal payment. These payments are higher in the next 5 years, and with the mismanagement of the economy under the Syriza left government this is likely to be unsustainable. Stretching the payments over an extended period will provide Greece more room to grow. Greece will still need to maintain financial discipline with expenditures lower than revenues in coming years, regardless of which party runs the government.
Grouped Articles
Debate Over Greek Debt ‘Relief’ Begins With the Definition
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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The cost of extra aid estimated by the IMF for damage done to Greece's financial system and economy between Jan-July 2015
07/03/2015
The IMF's estimate of extra aid needed for Greece is 60 billion euros ($66.6 billion) to tackle the worsening in the economy and the financial system following the collapse in talks, the imposition of capital controls, closing of banks, and the uncertainty created by the announcement of the referendum on the spending cuts and membership in the eurozone.
Grouped Articles
IMF Raises Referendum Stakes With Call for More Aid for Greece and Debt Relief
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Greek Shipping Industry Frets Over Higher Taxes
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
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Syriza in Greece and Podemos in Spain- anti-austerity parties in Greece and Spain in 2015
01/24/2015
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Leftist Syriza party set to win Greek vote, setting up showdown with Europe - The Washington Post
Washington Post 01/24/2015
Greek Financing Talks Break Down Amid Deep Divisions Over Bailout
Wall Street Journal 02/17/2015
Greece and Its Creditors Pummel Each Other, but Fight Is Not Over Yet
New York Times 06/19/2015
Greece Wanted to Reframe Europe’s Austerity Debate. It Failed.
New York Times 07/01/2015
Mirage of Economic Turnaround Masked New Greek Crisis in the Making
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IMF Warns Eurozone That Greece Needs Far More Debt Relief
Wall Street Journal 07/15/2015
Errors made by the IMF, Syriza Tsipras far left government, leading to the third bailout program of 2015 for Greece
07/06/2015
Just when the first signs of growth in the economy were taking place in 2014 the IMF held back on a 7.2 billion euro payment to Greece which would have increased liquidity to the private sector for growth. The IMF hope to gain leverage with a future Syriza far left government. The first half of 2015 led to economic anxiety in Greece with a failed negotiating strategy of Syriza far left government focussing only on the debt and not on the economy. The damage led to about 85 billion in addtional financing needed following the closing of Greece's banking system in July 2015.
Linked Articles
IMF Warns Eurozone That Greece Needs Far More Debt Relief
Wall Street Journal 07/15/2015
How to Undo the Damage in Greece
New York Times 07/06/2015
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