By Stavros Lygeros

It took one publication saying that Germany was ready to agree to an additional loan of 60-65 billion euros for optimism to soar in Greece. Even the gasping Athens stock exchange perked up.

The truth, however, is that clouds continue to darken the horizon, as the memorandum is based on the assumption that by early 2012 Greece will be ready to return to the markets. The way things look right now, though, it is unlikely that the markets will be ready to open their doors to Greece.

In order for a default to be avoided, Greece needs to either restructure its debt or to receive additional loans. The European Central Bank rejects the idea of restructuring. The only option that is under consideration is a voluntary reprofiling to avoid triggering credit default swaps. This is the reason why the eurozone is increasingly warming to the solution of a new loan package.

But let us look at the issue in terms of numbers: Even on the off chance that Greece’s primary debt is completely wiped out, in 2012 it will have to pay some 52 billion euros (35 billion in mature bonds and 17 billion in interest), while it is expected to receive 12 billion euros from the troika. In 2013, Greece is not expecting to receive anything from the troika, but it will still need to pay approximately 44 billion euros (27 billion in mature bonds and 17 billion in interest). Basically, it needs to have more than 84 billion euros for the 2012-13 period alone, so even if it receives a loan of 60-65 billion euros, it will still have a shortfall of 20-25 billion. Ostensibly, this amount is supposed to be covered by privatizations and the sell-off of state assets.

Life, however, does not end in 2013. Where will Greece find the tens of billions of euros it need annually to service its massive debt? And what will happen after 2014, when the amount to cover interest rises?

The recipe of spending cuts cannot alone make Greece’s debt sustainable so that it can begin borrowing from the markets. Inclusion in the permanent European mechanism, meanwhile, will merely recycle rather than solve the problem by feeding speculation over Greece’s possible expulsion from the eurozone.

The revival of the Greek economy can be achieved only with a bold reform program and tidying up expenses and revenues, in combination with a major boost in the country’s potential through the exploitation of flagging growth potential on the one hand, and a debt haircut on the other.