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Germany resists debt relief for Greece, but benefited from such a plan after WWII

2 Jul 2015 | Author: Business | No comments yet »

IMF admits Greece will need large scale debt relief + €50 billion – Will it trigger new talks?.

Such a write-off would also need to include a delay in payments: Greece should have a 20-year grace period before making any debt repayments according to the organization led by Christine Lagarde.

So what would happen if, for example, Greek economic growth is just 1 per cent of GDP lower than previously projected, and Athens is able to produce a primary budget surplus of only 2.5 per cent by 2018 rather than 3.5 per cent? Well, the IMF ran such a projection and found that the eurozone would have to write off Greece’s entire first bailout – a total of €53.1bn – just to return the country to a sustainable debt level. With banks closed and capital controls, many Greeks may feel that voting YES they will be voting to open the banks, and with a NO, they can say goodbye to their money. The European Central Bank always says it is a “rules based institution” but the decision to cap the Emergency Liquidity Assistance and force capital controls was clearly political.