French Finance Minister Michel Sapin said Wednesday the sustainability of Greece’s overall debt load should be discussed within current bailout talks aimed at avoiding the immediate threat of a Greek default.
“In an overall accord, the debt question isn’t taboo, (and) should be discussed even if it isn’t the most urgent” concern, Sapin told French lawmakers during parliamentary questioning.
While finding an agreement towards unblocking 7.2 billion euros ($8.1 billion) in bailout funds Athens needs to honour debt payments to the International Monetary Fund due on June 30 is the most pressing concern, Sapin said the wider question of Greece’s debt load should be examined amid the efforts to avoid a default by Athens.
Though many other eurozone countries involved in the talks are averse to examining it, the longer-term sustainability of Greece’s huge debt load “is among the topics on the table.”
Though staggering levels of Greek debt have required international creditors to extend Athens two massive bailouts, those funds have only increased Greek’s indebtedness, which now represents nearly 180 percent of annual GDP.
Many independent observers have long noted that even if an agreement can be found to free up the blocked bailout funds that will allow Greece to service debt payments coming due this summer, the enormity of the nation’s overall debt may well condemn Athens to struggle to honour interest payments without hopes of ever paying off the principle.
Germany has long been loathe to consider discussion of any debt forgiveness for Greece, and tended to focus discussion on deep structural reforms Berlin says are needed to allow the economy to perform better – and generate funds to pay its debts.
Only after those concessions by Athens are made and the current bailout agreement concluded, says a German government source, “can we discuss questions of the sustainability and financing of (Greece’s) debt.”