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Commission analysis sees debt relief for Greece, 4. bailout as cash buffer

Greece will need additional debt relief to regain the trust of investors, even though it’s likely to exit its bailout with a 9 billion euros ($10 billion) cash buffer, the European Commission said in a draft report obtained by Bloomberg.

According to the draft report, the European Commission estimates that additional 9 billion euro would be needed. the Commission is concerned the debt will reach 241% of GDP in 2060.

The country’s 86 billion-euro third bailout program from the European Stability Mechanism, agreed by Prime Minister Alexis Tsipras and European creditors in 2015, will expire in August 2018 with 27.4 billion euros left unused, the commission estimates in the so-called “compliance report” dated June 16. Disbursements up to then should also “cater for the build-up of seizable cash buffer” of around 9 billion euros, according to the document.

The report contains an analysis of the country’s public debt that points to potential wrangling with the International Monetary Fund following an agreement last week to disburse bailout funds, in which the Washington-based fund only agreed to a new program “in principle.” Even as the commission’s analysis points “to serious concerns regarding the sustainability of Greek public debt,” its assumptions about the country’s future growth prospects are still more optimistic than those of the IMF.

The conclusion drawn from the report points to the need for additional “additional debt-mitigating measures,” even under the baseline assumptions. “An appropriate combination of debt management measures,” including an “extension of maturities and grace periods for principal and interest,” is necessary to “bring Greek debt back to a sustainable level in gross financing needs terms,” commission staff said. (full article Commission Report Bloomberg)

OH yeah! Seek solution for the Greek debt problem by loading one loan over the other?

Read Bloomberg’s: “Europe’s Unserious Plan for Greece” – The latest deal on debt won’t work, and everybody knows it.

PS If I were the Commission I’d hit the safe road and make predictions until 3017. My predictions would be funded by taxpayers’ money, anyway, so I won’t have to care about my own insecurities. ops! and I almost forgot the IMF may do another funding of 2 billion euros. Then my bailout would be the 5. one.

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One comment

  1. KTG you have become a dangerous person to some quarters. Your predictions to 3017 are absolutely accurate. I fear for you. You may be abducted by Wolfie and be forced to become his chief economist. Beware!