ECONOMY

Creditors concerned about Greek debt sustainability, document shows

creditors-concerned-about-greek-debt-sustainability-document-shows

The creditor institutions which have agreed a draft third bailout for Greece have "serious concerns" about the sustainability of Greek public debt although they believe a nominal haircut can be avoided, a debt sustainability analysis seen by Reuters on Thursday showed.

"The high debt to GDP and the gross financing needs resulting from this analysis point to serious concerns regarding the sustainability of Greece's public debt," said the analysis, adding far-reaching reforms were needed to address the worries.

"In sum, an appropriate combination of extension of maturities and grace periods for principals and interests would allow to bring Greece debt back to a sustainable level in gross financing needs terms without the need for a nominal haircut as stated by the Euro Summit of 12 July," it added.

The analysis saw privatization proceeds, excluding those from banks, of 13.9 billion euros through 2022.

The institutions expect the Greek economy to shrink by 2.3 percent this year and by 1.3 percent next year, before returning to 2.7 percent growth in 2017.

[Reuters]