Greece needs wide debt relief to avoid permanent depression, thinktank warns

„One potential stumbling block to an agreement is the insistence of the IMF that it will not take part in a third bail out unless Greece’s debt is cut by 30%.

The NIESR [National Institute of Economic and Social Research] report said that an even bigger cut of 55% was needed to give Greece a chance of reducing its debt to 120% of GDP by 2020. It warned that continuing to insist on ‚unrealistic fiscal targets‘ will ensure that the Greek economy will ‚remain in depression‘. The report said: ‚According to our modelling, restoring debt sustainability requires a debt write-off equivalent to at least 55% of GDP, higher than the IMF’s estimate of 30%.‘ […]

In its quarterly analysis of the state of the global economy, NIESR said that by the time the Greek economy stops contracting in the middle of next year, gross domestic product would be 30% lower than at the start of the crisis in 2010 and 7% lower than when the country joined the single currency in 2001.

In other words, Greece has gained nothing by joining the eurozone!


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