Greece and its creditors are wrestling with the country's debts yet
again. It probably won't be the last time. As long as they keep making
the same mistake, the next agreement is no more likely to succeed than
the others.
Back in 2010, Greece was given one of the biggest bailout programs in history. It got new lending in return for fiscal austerity, but its debts weren't reduced: Creditors were spared any write-offs. Experts objected that the program put too big a burden on Greek taxpayers, that this was neither politically nor economically sustainable, and that creditors should be made to take losses.
They were right then, and they still are.
There's been some limited bailing in of creditors since then, an extension of maturities and lowered interest rates, but the basic pattern hasn't changed. As a result, Greece's debt keeps rising. It now stands at roughly 180 percent of gross domestic product. This is plainly unsustainable.
The new fix under discussion, according to a recent Bloomberg News report, would extend Greek loan maturities further, to 50 years from 30, and lower the interest rate paid by 0.5 percentage point. Another bailout loan, adding 15 billion euros, also looks likely. All this might keep the show on the road and allow the so-called troika representing Greece's creditors -- the European Commission, the European Central Bank and the IMF -- to say that the country can meet its debt target of 124 percent of GDP by 2020. Of course, after every previous negotiation, they also said that Greece was on track.
Read more: ekathimerini.com | Europe must face facts and forgive some of Greece's debt
Back in 2010, Greece was given one of the biggest bailout programs in history. It got new lending in return for fiscal austerity, but its debts weren't reduced: Creditors were spared any write-offs. Experts objected that the program put too big a burden on Greek taxpayers, that this was neither politically nor economically sustainable, and that creditors should be made to take losses.
They were right then, and they still are.
There's been some limited bailing in of creditors since then, an extension of maturities and lowered interest rates, but the basic pattern hasn't changed. As a result, Greece's debt keeps rising. It now stands at roughly 180 percent of gross domestic product. This is plainly unsustainable.
The new fix under discussion, according to a recent Bloomberg News report, would extend Greek loan maturities further, to 50 years from 30, and lower the interest rate paid by 0.5 percentage point. Another bailout loan, adding 15 billion euros, also looks likely. All this might keep the show on the road and allow the so-called troika representing Greece's creditors -- the European Commission, the European Central Bank and the IMF -- to say that the country can meet its debt target of 124 percent of GDP by 2020. Of course, after every previous negotiation, they also said that Greece was on track.
Read more: ekathimerini.com | Europe must face facts and forgive some of Greece's debt
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