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Greece is renegotiating its bailout at a time when the economy continues to struggle and living standards have plummeted and the country is in the frontline of a migration crisis
Greece is renegotiating its bailout at a time when the economy continues to struggle and living standards have plummeted and the country is in the frontline of a migration crisis

Greece May Crumble Under Debt

One European Union official hit out at the IMF’s analysis and said the assumptions aren’t based in reality because they don’t take into account the reform of Greece’s public finances

Greece May Crumble Under Debt

Troubled Greece will buckle under the weight of its huge debts, which are highly unsustainable over the longer term, according to damning analysis of the eurozone’s bailout by the International Monetary Fund.
Austerity measures and biting reforms pushed on Athens by its neighboring creditors are taking a heavy toll on the country, combined with high poverty and unemployment, said the Washington-based fund, news outlets reported.
Public debt is predicted to reach an eye-watering 181% of GDP this year, amid fears the country’s fragile situation could again spiral into crisis seen over the summer of 2015.
But Greece’s biggest creditor Germany is against writing off money owed, until the country meets the terms of its current bailout agreement.
Yet Athens is set to fail to meet the strict longer term economic targets put in place by creditors under the rescue program, IMF said.
The analysis is embarrassing for the eurozone, as tensions rise over how to best solve Greece’s economic woes. One European Union official hit out at the IMF’s analysis and told Bloomberg the assumptions aren’t based in reality because they don’t take into account the reform of Greece’s public finances.
The IMF had previously said it will only consider giving fresh loans to Athens in the next part of the bailout—which is set to be needed later this year—if debt-reduction plans are credible.
But the fund predicted that, under eurozone plans, Greece will struggle to recover, meaning its budget surplus—the amount the government receives in taxes and other income minus spending—will rise to just 1.5% in the long term.
European creditors have ambitiously forecast that Greece will run a surplus of 3.1%. Long term economic growth is predicted at 1% after growth of 2.7% this year.

  Difficult Situation
Mihir Kapadia, chief executive of Sun Global Investments, said: “The European debt crisis never went away—a fix was implemented and the can was kicked down the road but the problem came back in 2016, particularly in the case of Italy and Greece.  
“In particular, Greece is renegotiating its bailout at a time when the economy continues to struggle and living standards have plummeted and the country is in the frontline of a migration crisis.
“The Troika of Greek Creditors, the IMF, EU and ECB face a very difficult situation. “They do not want to write off but Greece is in no position to pay. There is a rift even within the IMF about fiscal targets set for Greece. Some within the IMF have called them unsustainable, seriously questioning the country’s ability to generate and sustain a surplus and long term growth.”
The IMF’s view of Greece is crucial because most European creditors want the organization to be involved in the next stage of the bailout.
In a statement, the fund said reforms have “taken a heavy toll on society that, together with high poverty and unemployment rates, has contributed to a slowdown in the reform implementation”.
It added: “Most directors agreed that Greece does not require further fiscal consolidation at this time, given the impressive adjustment to date.”

  Remittances Jump
Remittances from Egyptians working abroad are surging and foreigners bought more than $250 million in local assets on Sunday alone, further signs of growing confidence in the nation’s economy after it floated the currency and secured a $12 billion IMF loan, Bloomberg reported.
Expatriate workers sent home $4.6 billion in the fourth quarter of 2016, up 12% from a year earlier, and most of it transferred after the pound was floated on Nov. 3, the central bank said in a statement on Tuesday. Rami Aboul Naga, assistant sub-governor at the bank, told Bloomberg News separately that most of Sunday’s foreign inflows were in local-currency debt.

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