Greece Debt sustainability still has to be restored

Hopefully, negotiations will resume for an agreement on a financing strategy for Greece over the medium term. On these grounds, challenges will remain unchanged. Due to its size, debt sustainability is indeed, weak, despite all efforts made by Europeans to lower interest payments and smooth the redemption profile. Negotiations with the Syriza-led coalition failed mainly on the question of debt relief from official creditors. The nascent recovery has now been derailed. The Greek economy fell back into recession and will print negative growth at least in 2015. This deterioration in the growth outlook reinforces uncertainty on the ability of the government to achieve high primary surplus targets. Due to the use of the threat of Grexit in the negotiations, It is believed that, the sustainability of public finances and the growth outlook are even more linked than before. It is hard to imagine a sustained recovery which supposes investments, the return of foreign investors, access to capital markets, if the deal does not remove rapidly uncertainty about the future of Greece in the euro. To do so, a major improvement in the sustainability of public finances is needed says, BNP PARIBAS