Greece’s debt is “going up” but is “manageable” coming out of the double debt and health crisis because its annual servicing cost is much lower than in many other countries, the head of the European Stability Mechanism, Klaus Regling, said in an interview published on Tuesday.
Speaking to the DPA, EFE, ANP and AFP news agencies, Regling played down concerns of Greek debt “exploding” as a result of measures to prop up the economy following almost two months of lockdown and spiraling tourism, arguing that Greece has the benefit of very low borrowing rates.
The debt, he conceded, “is going up, of course, because Greece will run a large fiscal deficit, like everybody else,” and “comes on top of the highest debt ratio in Europe.” However, Regling added, “when you compare debt ratios, you must realize that in the case of Greece, more than half of their debt is with the ESM, so it is at very, very low interest rates. So in that sense, the annual debt servicing cost for Greece is lower in terms of GDP than in many other countries.”
The German economist also praised Greece on its response to the coronavirus crisis, saying it is “among those countries that have dealt well the pandemic.”
“There is a relatively small number of infected people and a very limited number of people who died. So there has been great success, in that sense, and we can only congratulate Greece on that success,” Regling said.