A Greek Tragedy

Posted on June 05, 2017 by Patrick Wadsted

Following on from my article Déjà Vu regarding the trials and tribulations of Greece’s attempts at restructuring its debts, more news emerges that as an Insolvency Practitioner I find absolutely astonishing.

Whilst considering various restructuring alternatives, the euro zone bailout fund, the European Stability Mechanism, has looked at a debt relief scenario that deferred interest payments to be made by Greece until 2048. This would mean that Greece’s euro zone creditors would forgo receipt of up to 123 billion euros until that date. This calculation by Germany’s Finance Ministry would in reality be a new loan to be added to the 247.5 biilion that Greece already owes and cannot service the interest on, let alone pay back the capital.

Here comes the comical bit. The International Monetary Fund (IMF) says it cannot contribute loans to Greece’s current bailout unless it gets assurances that its debt will be sustainable.

Hang on a minute, if 247.5 billion euros is not sustainable, how on earth will 370.5 billion be! I am however sure that those assurances that are required will be forthcoming.

The tragedy is that were Greece not part of the euro zone (which it shouldn’t be as it fudged its figures) it would have defaulted on its debts a long time ago.

And before you think I have a thing about Greece, guess where I am holidaying this summer?