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Athens Macedonian News Agency: News in English, 17-04-13
CONTENTS
[01] Debt relief for Greece essential, Peterson Institute working paper
concludes
[01] Debt relief for Greece essential, Peterson Institute working paper
concludes
Greece cannot sustain primary surpluses exceeding 3.5 pct of GDP for
more than three or four years at most and will therefore need additional
debt relief from its European creditors, according to a study published
on the Peterson Institute for International Economics website and cited
by the Financial Times on Thursday.
The working paper "Does Greece Need More Official Debt Relief? If So,
How Much?" was produced by economists Jeromin Zettelmeyer (PIIE), Eike
Kreplin (German Federal Ministry for Economic Affairs and Energy) and
Ugo Panizza (Graduate Institute, Geneva) and published online on April 7.
It concludes that primary balance paths required to make Greece's debt
sustainable "are not plausible" and that Greece will therefore require
additional debt relief. Analysing this further, it shows that the
debt relief measures suggested by the Eurogroup in May 2016 - which
expressly rule out any nominal debt haircut - can be sufficient to
address the problem but with some important provisos. Greece's creditors
in the Eurogroup must be prepared to accept both decades-long maturity
extensions on European Financial Stability Facility (EFSF) debt and
interest deferrals that could lead to a large rise in EFSF exposure to
Greece before it begins to decline.
"If the Eurogroup wishes to avoid the latter, it will become necessary
to either (1) extend the scope of the debt restructuring, (2) lower
the interest rates charged by the EFSF significantly below current
predictions, or (3) extend European Stability Mechanism (ESM) financing
beyond 2018 and delay Greece's return to capital markets for a protracted
period," the authors of the paper conclude.
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