The European Stability Mechanism Managing Director, Klaus Regling, said on Thursday that the time to decide on whether Greece needs additional debt-relief will be August 2018.
After three bailouts since 2010, Athens has a 177% debt-to-GDP ratio. The International Monetary Fund is the only official Greek creditor that insists Greece needs immediate debt relief to recover. Although the average maturity of the Greek debt is thirty years, the IMF insists that the Greek debt is not serviceable.
Addressing a news conference in Cyprus, Regling said that Athens has benefitted from more debt relief than “any other country in the world.”
Greece imposed a “voluntary” haircut on its public debt in 2012, which hurt mainly domestic lenders, savers, and pension funds. However, Greece has also seen a substantial haircut on interest rates and the restructuring of debt maturities that have been assumed by its Eurozone partners.
Regling recalled on Thursday that the reprofiling of Greece’s debt towards the ESM saves Greece €10bn a year.
The underlying question is whether Greece will be able to return to international capital markets in August 2018 to refinance its debt. Regling made clear that this decision would be made only after the latest bailout programme reached fruition.
If necessary, but not before August 2018, Eurozone leaders have committed to further extension of Greek maturities for up to 15 years.