The Eurogroup meeting on Tuesday in Brussels will, by all accounts, sign off on the first review of the Greek program (third bailout) and unblock up to 10 billion euros in financing for the Greek state. over the coming year, Nevertheless, an agreement on a possible course for Greek debt relief depends, in large part, on a compromise between European creditors and the IMF.
The Washington-based Fund has demanded a signficant “softening” of conditions linked to Greece’s debts to institutional creditors in order to remain an active lender in the bailout.
Its recent estimates show that the Greek GDP-to-debt ratio will reach 250 percent by 2060, a dramatic turnaround from just a year earlier (June 2015) when a similar review by the Fund put the figure at under 60 percent of GDP. The figure reaches 174 percent of GDP in 2020, dropping slightly to 167 percent in 2022.
The IMF’s experts calculate that gross borrowing needs by the Greek state will exceed 15 percent of GDP until 2024, and 20 percent by 2029, while reaching the stratospheric 60 of GDP by 2060.
As such, the Fund has vociferously demanded relief measures now, including an extension of repayment dates for EFSF, ESM and Greek Loan Facility loans by 14, 10 and 30 years, respectively.
The Fund has also called for longer grace period, beyond the loans extended by the ESM, in order to bring down annual borrowing needs below 17 percent of GDP by 2040 and 24 percent by 2060.
The IMF study also calls for a fixed interest rate to ensure that the debt loan remains in a downward course, pointing to a 1.5-percent interest rate until at least 2040.
