French economy minister says Greek crisis isn’t over, sees need for debt relief

French Economy Minister Emmanuel Macron said that the Greek crisis isn’t over and that the country will need debt relief eventually.

“The Greek moment isn’t over,” Macron told journalists Wednesday in Paris. “We’ve avoided the worst but real political risks persist in Greece.”

Greek lawmakers vote on Wednesday on a package of reforms and financial aid agreed by European leaders in Brussels on Monday morning. With Greece’s finances deteriorating rapidly and its banks on the verge of collapse, the European Union is seeking ways to provide the country with a bridge loan to keep the country afloat.

The International Monetary Fund, also a creditor, said Tuesday that Greece needs debt relief “far beyond” what European creditors have been willing to consider, including possibly deep haircuts on the value of Greek debt. Macron said debt relief will be needed eventually.

“In the long term, this level of debt is impossible” for Greece to sustain, he said. “In the short term, it’s not politically possible to reduce the debt.”

The IMF now estimates Greece’s debt will peak at close to 200 percent of gross domestic product in the next two years. That compares with the 170 percent estimate it published July 2.

[Bloomberg]