ESM: Greece won't need debt relief if it keeps its surplus above 3%/GDP for 20 years - Reuters

Eren Sengezer FXStreet

According to a confidential paper prepared by the European Stability Mechanism, obtained by Reuters, Greece will not need any debt relief from euro zone governments if it keeps its primary surplus above 3 percent of GDP for 20 years.

Key highlights (via Reuters):

Greece would have to keep primary surplus of around 2 pct/GDP until mid-2030s if maximum debt relief offered
Maximum debt relief under consideration is extension of avg weighted maturities by 17.5 yrs from current 32.5 yrs
Maximum debt relief would also cap interest on loans at 1 pct until 2050, limit loan repayments at 0.4 pct of greek GDP
Maximum debt relief would also entail euro zone buying back some 13 bln euros worth of IMF loans to Greece
Under IMF assumptions of future Greek growth, primary surplus, even maximum euro zone debt relief offer is not enough -paper

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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