‘Greece’s public debt can be managed’
GREECE’S public debt can be manageable, the eurozone bailout fund said yesterday, responding to a leaked report by the International Monetary Fund (IMF) that its debt would explode to 275 percent of gross domestic product (GDP) by 2060.
A spokesman for the bailout fund, 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 favourable loan conditions over the long term and the recently adopted short-term debt relief measures,” the ESM said.
In the document, seen by the Financial Times, the IMF calculated that Greece’s debt load would reach 170 percent of GDP by 2020 and 164percent by 2022. But it would become explosive thereafter and grow to 275percent of GDP by 2060, the paper quoted the report as saying.
The spokesman said, however, that the eurozone had promised to offer Greece additional debt relief if Athens delivered on all its reform promises. “As a result, we see no reason for an alarmistic assessment of Greece’s debt situation.”