A Link To The Report Itself.pdf

Greece's public debt has become highly unsustainable due to the easing of policies and the recent deterioration in the domestic macroeconomic and financial environment. The financing need through end-2018 is estimated at Euro 85 billion, and debt is expected to peak at close to 200 percent of GDP in the next two years. Greece's debt can only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far. The IMF staff's preliminary public debt sustainability analysis notes that the significant shortfalls in program implementation during the last year led to a significant increase in the financing need, and that debt-to-GDP by 2022 was projected to increase from 105 percent to 142 percent. The recent events, including the closure of banks and imposition of capital controls, have extracted a heavy toll on the banking system and the economy, leading to a further significant deterioration in debt sustainability. The preliminary assessment of the three institutions is that total financing need through end-2018 will increase to Euro 85 billion, and that debt would peak at close to 200 percent of GDP in the next two years.