Just when you think things can’t get any crazier, they always do. The Guardian reports on unpublished Troika documents that show Greece is only too right in asking for debt relief. That for the Syriza government to sign what the Troika wants to force them to sign would see Tsipras et al plunge their country into a financial hell hole.
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So let's say that somehow Greece kicks every can left until the end of 2015. Surely Greece will be out of the woods then, right.
Wrong. Because for Europe's most devastated country, it is only then that the debt nightmare officially begins.
Below are all upcoming Greek debt payments until 2057, also known as the first, ninth and all circles of Greek hell inbetween:
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What’s potentially even weirder is that all German MPs have received the documents, because a vote on them was supposed to take place, but none have said a thing about them. Good thing one at least was awake enough to send them to the press.
So they have these docs, and then yesterday Merkel says no more talks until after the referendum, and total silence follows. Boy, has she fallen from her pedestal. We know the Troika are composed of lackeys to the banking system -and this proves it once and for all-, but Merkel is worse. And she has the entire Bundestag wrapped around her finger. Some democracy, that Germany.
But the documents were also part of a package that was sent to Greece and everyone else. But still debt relief remained off the table? What am I missing here? How could Tsipras have signed off on this? He could see the Troika’s own numbers, and still they refused to take them into account and make them part of the deal?!
The Guardian gives the write up a half-ass title, but the contents are clear enough.
Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors. The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery.
They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the IMF deems unsustainable. The documents show that the IMF’s baseline estimate – the most likely outcome – is that Greece’s debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded.
That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession. The documents admit that under the baseline scenario “significant concessions” are necessary to improve Greece’s chances of ridding itself permanently of its debt financing woes.
Even under the best case scenario, which includes growth of 4% a year for the next five years, Greece’s debt levels will drop to only 124%, by 2022. The best case also anticipates €15bn in proceeds from privatisations, five times the estimate in the most likely scenario.
But under all the scenarios, which all assume a third bailout programme, looked at by the troika, Greece has no chance of meeting the target of reducing its debt to “well below 110% of GDP by 2022” set by the Eurogroup of finance ministers in November 2012. In the creditors own words: “It is clear that the policy slippages and uncertainties of the last months havemade the achievement of the 2012 targets impossible under any scenario”.
These projections are from the report Preliminary Debt Sustainability Analysis for Greece, one of six documents that are part of the full set of materials that comprise the “final” proposal sent to Greece by its creditors last Friday. These, which the Guardian has seen, were obtained by Süddeutsche Zeitung after they were sent to all German MPs with the expectation that the deal would need to be approved by the country’s parliament. A vote in the Bundestag never took place as the Greek prime minister, Alexis Tsipras, rejected the plans and called a referendum on whether to accept the creditors’ demands. While the analysis underlines the fact that Greece has already benefited from a number of debt-reducing measures – maturities have been extended, interest payments are similar to those of less indebted nations and the PSI in 2012 cut debt by about €100bn – the document also admits that under the baseline scenario “significant concessions” would improve sustainability.
But despite the lenders’ admission that Greece cannot thrive without debt relief the documents provide no clarity about what such a package might look like, nor does it provide any detail of a third bailout programme despite assuming one would exist. They promise only a more detailed debt sustainability analysis in due course.
There’s more in the article. But who needs more of this?