The Greek crisis rages on and the IMF provides a reality check.
Greek debt is expected to to peak at 200% of GDP in the next two years. Greece needs debt relief far beyond what Europe has been willing to consider and the alternatives are either annual transfers or a big upfront haircut.
In addition, the recent deterioration in the economy points to a bigger debt relief. The euro-zone is only considering reprofiling of the debt, and only after the first review and only as a consideration.
In the meantime, it isn’t unclear how Greece will get its bridge loan, German finance minister Schaeuble continues pushing for a Grexit, and it is unclear if Tsipras can pass the agreement in parliament. The aGreekment is clearly at risk.
Regarding the bridge loan, various EU officials say it’s difficult. The idea of using the old ESFM, that would involve the UK, was rejected by non euro-zone countries. Another idea was that France would offer a bilateral loan, but that seems unlikely as well. This is part of the original deal, not the ESM bailout that depends on the Greek parliament approving the absurd demands.
