New burden on the debt from 2033
In nine years, when Greece enters 2033, it will be faced with a problem going back to its bailout past: The public debt will suddenly be burdened with an extra 25 billion euros, or 8% of the then GDP, as the interest on loans from 2013, which has been frozen for almost two decades as part of debt relief arrangements with its European lenders, will be added to it.
This means that after 2032, the country will pay increased interest payments for this new debt, while at the same time its debt servicing costs will also be burdened due to the transition from the low interest rates of the official sector loans (1.5%) to those of the market, which is already being resorted to more and more.
Central banker Yannis Stournaras has decided to sound the alarm in time to prevent or limit the risks. He has already highlighted the problem and is expected to repeat it in the central bank’s upcoming Interim Report on Monetary Policy on Wednesday.
His position will be that in order not to create a problem with the addition of this debt, it must be ensured it will be repaid over a long period with some arrangement with the lenders and a prudent fiscal policy.
