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Tuesday, March 13, 2012

Greece take II - it's official

Reuters has just released the latest EU/IMF/ECB troika report – the first to fully account for the bond swap and its impact on Greek debt. We’ll provide a fuller run down once we’ve had more time to trawl through the 195 page report (we have to give the troika some kudos for the turnaround on this one), but for now we’ll just flag up a few headline figures. We also couldn't resist comparing the new Troika estimates to our previous estimates of how Greece's debt will change following the bailout, which we published a couple of weeks ago. We would lie if we said we weren't pretty much spot on.

Greece's debt-to-GDP after PSI

Open Europe's estimates: 161%
New Troika report: 160%

Amount of money needed to recapitlise Greek banks

Open Europe estimates: €50bn
New Troika report: €48.8bn

Cost of private sector involvement (PSI)


Open Europe estimates: €86bn
New Troika report: €78bn

(The discrepancy between the OE and Troika estimates primarily seems to be a consequence of the Troika report not including the near €6bn to pay off accrued interest, which doesn’t get lumped into the ‘cost of PSI’ but may fall into other funding costs). In any case still doesn’t seem like great value for money.

Other interesting figures include:
  • Total EU/IMF assistance in 2012: €112bn (most yet for a single year)
  • Average revenue from privatisation: €4.4bn (despite the plan barely getting going)
  • Amount Greece needs to raise on the market in 2015: €7.6bn (despite new Greek bonds trading with the highest yields in the eurozone)
In addition, the graph below is pretty revealing. Given the optimistic privatisation targets and the optimistic growth projections the bold turquoise and dotted orange line give us some significant cause for concern to say the least.

2 comments:

Rollo said...

The delays and procratinastion with this Greek 'bail out' was vital in order to pass the cost of the debt onto the tax payer, away from the banks. It has never been about keeping Greece afloat, but saving French and German banks. The financiers have made monkeys of the EU, if they were not already monkeys. Meanwhile memebership of the Euro continues to blast holes in the sinking ships of Italy, Portugal, Spain, France, Belgium, Greece while the EU pretends to bail them out.

Denis Cooper said...

So on the most optimistic scenario it would be about twenty years before Greece fulfilled the Maastricht criterion on total debt, ie not more than 60% of GDP, and therefore just on that test it could then be allowed to join the euro.

But Greece is already in the euro, and there is no intention that Greece should leave the euro, so there must something wrong there!

Meanwhile, the euro-enthusiastic Greek government has signed Greece up to the euro-federalising "fiscal compact", and has been welcomed as a signatory, even though it seems very unlikely that Greece will be able to meet the terms of that extraneous non-EU treaty any more than it has ever met the less exacting terms for euro membership laid down in the actual EU treaties.

I'm not sure how much more of this euro-crap I can take, to be honest.