Greece faces “explosive” public debt by 2030, says leaked IMF report

30 Jan 17

Greece faces an “explosive” surge in public debt by 2030, even with the relief measures promised by its European creditors, the International Monetary Fund has said.

Greece Capital Shutterstock.jpg

Greece Capital

Photo: Shutterstock


In a draft report on Greece leaked to a number of media outlets, the fund reiterated its stance that Athens needs more substantial debt relief to meet the ambitious fiscal targets imposed on it by creditors as part of its third €86bn bailout package.

Greece’s European creditors insist this is possible without further debt relief, while the IMF is refusing to join the programme unless additional austerity measures are applied to allay its concerns about debt – an idea rejected by Greece.

The stalemate in negotiations remained unresolved following a meeting of the Eurogroup last week, with ministers warning afterwards that “time is running out” to reach an agreement.

According to the leaked report, the IMF still considers it unrealistic to expect Greece to be able to meet the programme’s targets and repay its debt, worth 180% of GDP. 

Even with the short term debt relief measures creditors have offered, the country faces an “explosive” surge in public debt by 2030, the fund warned. By 2060, Greek government debt will hit a whopping 275% of GDP, it estimated.

“Greece cannot grow out of its debt problem,” the IMF wrote, as reported by the Guardian. “Greece requires substantial debt relief from its European partners to restore sustainability.”

While Europe insists the Greek bailout programme is sound, the fund’s endorsement is seen as the true mark of credibility. It has so far refused to participate in the programme because of its concerns.

The country is also expected to achieve a 3.5% budget surplus target when the current bailout package ends in 2018 – and then maintain it for a number of years. This would be a significant achievement for any economy, let alone Greece.

The disagreement between the IMF and the other creditors has delayed the completion of a second review into Greek compliance with the bailout requirements. This must be completed before the next tranche of bailout funds can be released.  

Greece is due to make debt repayments worth €10.5bn in June. Without a fresh loan from creditors, the country could fall back into a debt crisis just as the economy appears to be turning around. 

The country’s economy climbed out of recession for the first time in two years in 2016, and the government achieved a €4.4bn budget surplus excluding debt repayments – well above what was required under the bailout deal. 

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