Greece will miss the five-year debt reduction target that underpins the country’s 130-billion-euro bailout, according to forecasts released by one of its main lenders on Monday.
In its global fiscal monitor report, the International Monetary Fund said the debt would fall to 152.8 percent of gross domestic product (GDP) by 2017, compared with a target of 137.3 percent.
The target was agreed with the IMF and European Union under a debt sustainability scenario that forms the basis for the country’s 130-billion-euro bailout package.
Under the bailout plan, Greece is due to start generating primary fiscal surpluses of about 4.5 percent of GDP from 2014 onwards to reduce its debt to about 120 percent of GDP in 2020.
The IMF report, however, shows primary surpluses of that scale only two years later, in 2016.
“In Greece, a deeper-than-expected recession and slippages in the implementation of fiscal measures will once again complicate attainment of the ambitious deficit reduction targets,» the IMF said.
IMF executive director Menno Snel said on Monday that European countries should consider restructuring the Greek debt they hold if the country’s financial burden proves to be unsustainable.
The EU, however, looks more inclined to give Athens more time to get its fiscal program back on track, with Greek Finance Minister Yannis Stournaras saying international lenders were considering giving Athens two more years. [Reuters]