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A forecast made by Germany’s Finance Ministry says that a Greek debt relief scenario that suspends interest payment until 2048 could lead to the nation’s creditors deferring receipt of up to 123 billion euros, according to a Reuters report.
A letter written to a member of parliament seen by Reuters on Friday, revealed the ministry’s calculations contemplating various restructuring scenarios laid out by the European Stability Mechanism (ESM).
“With such an interest deferral, it would de facto be a new loan with a volume that depends on the development of interest rates,” the document said. “The estimated volume of the deferred interest up until 2048 would be around 118-123 billion euros.”
The International Monetary Fund (IMF) has estimated that the Greek economy will average a growth rate of only 1 percent per year and return to a primary surplus of 1.5 percent from 2023 after five years at 3.5 percent. The Fund maintains its stance saying that it cannot contribute to Greece’s loans unless the it is secure that the debt will be sustainable.
Greece must repay debt maturing in July in the amount of 7 billion euros to be taken from its 86-billion euro rescue package. The disbursement is dependent on the second review which entails the assessment of its bailout progress by the country’s lenders.