Deal agreed to reduce Greek debt
International lenders have agreed new steps to cut Greece's debt pile further but it still has to fill a €10 billion gap to gain the IMF's approval for its next tranche of aid, a senior Greek government official said today.
The International Monetary Fund has agreed to deem the country's debt viable if it falls to 124 per cent of GDP in 2020, according to an official. Its earlier target was 120 per cent.
"The euro group has already agreed on measures to reduce Greek debt to 130 per cent of GDP in 2020, so that leaves a gap of 5-6 percentage points of GDP to be covered - about €10 billion," he added.
The official did not disclose what measures had been identified that would reduce the lenders estimate of public debt in 2020 from a previous 144 per cent of GDP.
Another senior source involved in the negotiations confirmed that the IMF would now accept 124 per cent as a target but said that to say the remaining gap only amounted to €10 billion was much too optimistic.
According to current government projections, Greek debt is seen at €340.6 billion, or 175.6 per cent of GDP at the end of 2012. It is expected to peak at €357.7 billion, almost 191 per cent, in 2015.
Greece's international lenders failed earlier this week to agree how to get the country's debt down to a sustainable level and will have a third go at resolving their most intractable problem on Monday.
According to a document circulated at that meeting, Greece's debt cannot be cut to 120 per cent of GDP by 2020, unless euro zone member states write off a portion of their loans to Greece, which Germany has consistently said would be illegal.
There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to impose a moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.