Athens (Greece) on Thursday. A pro-European demonstrator in Parliament. Illustration. AFP PHOTO / LOUISA GOULIAMAKI
An overview of what has already been done, what is impossible , what remains feasible
– What has already been done.
If the government gets to Alexis Tsipras convince creditors that debt relief is necessary, it will not the first, far from it, since Greece is under financial assistance. That is to say, since spring 2010. In 2012, Greece had already experienced one of the largest, if not the largest debt reduction operation in the world, a hundred billion euros. At the time, private investors had been involved consenting to actual losses up, an estimated 75% to about 60% of their stake.
The Greek public debt as a proportion of GDP has not fallen yet sustainable. It was 171% in 2011, dropped temporarily to 157% in 2012, to start climbing and currently reach about 180%.
Greece also already benefited from restructuring measures light of its public creditors on the loan term and the level of interest. The average maturity of its debt is currently 16 years, much more than in other countries in the eurozone, and the burden of its debt by 4% of GDP in 2014, less than in Portugal, for example.
– This is feasible:
The most likely option is that of a “light restructuring” of the debt: the nominal amount Debt does not move, Greece “shall” always exactly the same, but repayments are rescheduled again, and its reduced interest expense. The creditors themselves would have no budgetary consequences to fear
Note that all public creditors are not equal. If European states may prove flexible enough, bilaterally or via special funds for assistance to Greece (EFSF and ESM), this is not the case of the International Monetary Fund or the European Central Bank, the most rigid rules. According to a European source, this is, in the shorter term, to help Greece “pass a bump in 2015,” particularly busy year in repayments to the IMF and the ECB, before finding a more favorable pace for several years
– What he can not do.
These same European states absolutely refuse to go further accepting a “haircut”, literally a “haircut” or even “mowing”. This is an outright reduction of the nominal amount of the debt, as imposed on private creditors in 2012. A “haircut” would oblige the creditor countries to move their accounts in the realm of cold hard losses, thereby widening their deficits rognerait budget or surpluses, as appropriate.
It is unthinkable for Germany, which proudly displays accounts balance, but also for other European countries, went through hard cures budgetary rigor, whether the consideration for international assistance (Portugal, Ireland etc.) or not.
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