An increasing number of individuals and agencies are acknowledging the necessity for a hair-cut on the Greek debt.
The National Institute for Economic and Social Research (NIESR) published a report on Tuesday that calls for the biggest Greek debt haircut that has been argued for yet.
“If the “troika” continue to insist on unrealistic fiscal targets, the Greek economy will remain in depression. According to our modelling, restoring debt sustainability requires a debt write-off equivalent to at least 55 per cent of GDP, higher than the IMF’s estimate of 30 per cent. More broadly, recent policy announcements among euro zone policymakers risk turning a monetary union into a mere fixed exchange rate system,” the press release for the study reads.
55 percent of the Greek GDP equates to 95 billion euros.
With increasing calls for a Greek debt reconstruction, the Greek government is gaining traction for its insistence that the debt is unsustainable and requires a haircut. Whether this will yield results is another matter.
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