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“Greek debt-to-GDP ratio” cause of concern for IMF’s threat to stay away from bailout pact

  • Debt to GDP ratio: IMF threatens to pull out on back of European Commission issued its own, less stark forecast yesterday in which it mentioned the Greek debt-to-GDP ratio would be 165% in 2020 and 150% in 2022 if Athens made reforms.

    The IMF's debt sustainability analysis may force her within months to choose between two far more unpalatable options: grant massive debt relief or see the IMF walk away.

  • Debt restructuring: Review of earlier lessons of Athens's financial situation presented to European Union leaders on the weekend and released publicly on Tuesday, the IMF hints the country would by no means arrive at a point where its debt was sustainable - that it will over time be able repay its loans - without a substantial restructuring by official EU creditors.

  • Three conducive options:

    Expanding debt tenure (Stretching out debt repayments over decades)
    Supply of cash regularly to Athens to repay the debts
    Writing down some of the current value of the debt via a "haircut".

 

 

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