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Greece, go figure! IMF: Debt not sustainable ESM: Debt Sustainable

Is the Greek debt sustainable or not? Opinions and approaches differ. The International Monetary Fund insists that the Greek debt is not sustainable, the Eurozone’s Fund European Stability Mechanism insists that the Greek debt is sustainable.

Greece has three weeks to deal with ‘potentially disastrous’ debt, the IMF said adding that failure of Greece and the EU to reach compromise by 20 February ‘would bring back Grexit with a vengeance’.

In a leaked report compiled by IMF staff and expected to be discussed at the broad of directors meeting on February 6th, the Fund says:

In a devastating assessment that may well dominate the course of events, the IMF warned that even if reforms are religiously implemented — and agreed short–term debt relief imposed — Athens’ debt load is doomed to become “explosive”.

“Greece cannot grow out of its debt problem,” the Washington-based body wrote in a confidential report leaked to the media last week. “Greece requires substantial debt relief from its European partners to restore debt sustainability.”

The country’s debt will explode to 275 percent of GDP by 2060.

Greece’s public debt can be manageable, the eurozone bailout fund said on Sunday, responding to the leaked report by the IMF

A spokesman for  the European Stability Mechanism (ESM), said the path for Greek public finances agreed between Athens and the eurozone was credible and backed by contingency measures in case of unforeseen events.

“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 said.

The spokesman added, however, that the eurozone had promised to offer Greece additional debt relief if Athens delivers on all its reform promises.

“As a result, we see no reason for an alarmistic assessment of Greece’s debt situation,” the spokesman said.

the point in the whole disagreement is whether German Finance Minister Wolfgang Schaeuble wants a solution or not. Everybody knows what’s his favorite slogan since summer 2011: GREXIT. Temporary or permanent he doesn’t care.  Main thing he gets rid of Greece and proceeds with a Monetary Union he tailors in his own small workshop.

While the lenders seems unmovable in their position, Greeks are holding their breath… Well… It is the Government of Alexis Tsipras that worries about its future should the talks about the Greek debt end in a deadlock. The dispute between IMF and ESM cannot but put immense pressure on the government, the lenders demand additional and endless austerity.

The common Greeks watch from a distance, in hope that the nightmare is over. Soon. At some point. And they adjust themselves, and keep struggling to survive.

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One comment

  1. In fact, dear KTG, the Quisling government does not give a damn about the debt, the country, the people or any other such small matter. They only thing they care about is their fat salaries and perks; they will do anything to keep them.