2 Jul 2015
IMF: Greece needs €50 billion in new funds and large scale debt relief
FXStreet (Córdoba) - While Greeks set up for the referendum on whether to accept more austerity measures demanded by creditors in exchange for aid, the International Monetary Fund (IMF) described Greek debt as “unsustainable” and said the country needs large scale debt relief.
In a report, the IMF said Greece needs €50 billion in new funds over the next three years and large scale debt relief to create “a breathing space” and stabilise the economy. The institution suggested it will not back up a third Greek bailout unless it included both a commitment to economic reform and debt haircuts.
The IMF estimates that even if Greece had primary surplus of 2.5% and real GDP growth of 1%, a significant haircut would still be required and warns that Greek GDP forecasts are subject to very considerable downside risks.
Extract from IMF document, via The Guardian:
“Even with concessional financing through 2018, debt would remain very high for decades and highly vulnerable to shocks.”
“Given the fragile debt dynamics, further concessions are necessary to restore debt sustainability. As an illustration, one option for recovering sustainability would be to extend the grace period to 20 years and the amortization period to 40 years on existing EU loans and to provide new official sector loans to cover financing needs falling due on similar terms at least through 2018”, says the IMF.
In a report, the IMF said Greece needs €50 billion in new funds over the next three years and large scale debt relief to create “a breathing space” and stabilise the economy. The institution suggested it will not back up a third Greek bailout unless it included both a commitment to economic reform and debt haircuts.
The IMF estimates that even if Greece had primary surplus of 2.5% and real GDP growth of 1%, a significant haircut would still be required and warns that Greek GDP forecasts are subject to very considerable downside risks.
Extract from IMF document, via The Guardian:
“Even with concessional financing through 2018, debt would remain very high for decades and highly vulnerable to shocks.”
“Given the fragile debt dynamics, further concessions are necessary to restore debt sustainability. As an illustration, one option for recovering sustainability would be to extend the grace period to 20 years and the amortization period to 40 years on existing EU loans and to provide new official sector loans to cover financing needs falling due on similar terms at least through 2018”, says the IMF.