The scrutiny that fell this week on the IMF’s debt ceiling provision, and especially on the way it affects the Fund’s participation in the Greek program, belies the fact that the IMF is obliged to calculate this factor in all of the programs where it has involvement.
Moreover, IMF officials on Friday, including the Fund’s mission chief for Greece, Delia Velculescu, confirmed that Athens had acquiesced to the debt ceiling.
Thursday’s IMF executive meeting in Washington and the plethora of statements afterwards ended rife speculation recently over whether or not Athens could proceed with an exit into the capital markets without the Fund’s “green light”, given that the debt ceiling provision was clearly stipulated in official documents exchanged between the two sides.
Specifically, the leftist-rightist coalition government appears to have accepted a cap of 325 billion euros for its central government debt load over the course of the adjustment program. The provision, in fact, affects the loan tranches extended by the ESM to Greece.
In essence, a month of speculation and hearsay – often by official lips – over a possible return by Greece to the markets, even for a small-scale five-year bond issue after the conclusion of the second review on June 15, MAYBE was for naught.
The most recent tranche of ESM bailout loans extended to Greece just last week means that the country cannot issue new debt.
As a result, the government appears ready to examine the possibility of choosing a roll over bond, merely replacing an issue that matures in 2019, instead of an issue that matures in 2022.
The latest saga in the Greek debt issue came on the heels of Eurostat’s announcement that the country’s debt totaled 310.622 billion euros in the first quarter of 2017, or 176.2 percent of GDP.
That figure is the highest among Euro zone and EU member-states.
Nevertheless, the figure was down from the fourth quarter of 2016 when the debt was higher by 4.2 billion euros, or 2.8 percentage points higher in comparison to GDP.
