According to a report by Deutsche Welle, a second debt “haircut” will be necessary for Greece to recover, despite the remarkable progress in finances which has been documented.
The German broadcaster’s report explains that Greek divs are not always reliable, which creates skepticism amongst Eurozone members, which in turn causes many delays. Last year’s 691 million euro primary surplus for example was essentially a hoax, since the Greek government quite simply refused to pay any of its debts in December 2013.
The Greek government’s main goal of returning to the market necessitates a primary surplus. This, according to economist Jens Bastian, is not likely to happen though since the debt is constantly increasing and Greece does not have the ability to pay it off on its own. Mr. Bastian explains that even if tax evasion is tackled and the taxpaying base is increased, Greece will be unable to cover is public debt.
The solution according to Mr. Bastian, who also participated in the European Commission’s Task Force for Greece, is to arrange an international summit for debt, like the one that took place in 1952 in London, when a huge portion of German debt was erased and the rest was restructured, with the final debt payment being in October 2010.
Despite the taboo nature of Greek debt amongst creditors, the German economist believes that decisions must be made sooner rather than later, otherwise the debt will quickly expand to its 2012 levels and then it might be too late.
