Measures to ease debt may come in stages

The eurozone has sent a clear message in recent days that it has found a way to secure the sustainability of the Greek debt and the new measures that should be taken in that direction.

The sustainability of the debt will be determined by calculating the annual cost of its service as a percentage of the country’s gross domestic product. The limit will be 15 percent, but only provided that the country fulfills its bailout obligations.

Crucially, sources say that the the country’s debt could be eased in installments, in that as Greece proceeds with the fulfillment of the bailout requirements, there will be more measures taken to reduce the debt’s burden.

Such measures could include: extending the repayment time of the loans issued by the European Stability Mechanism – which are supposed to start being repaid from 2023 and up to 2043 – by up to 50 years (in 2062); the supply of an extra grace period for the payment of interest to the ESM; and in interventions in the interest rate. Greece would prefer for the ESM loan interest rates to turn from ranging to fixed, at a level that would be slightly higher than the existing ones, for the next 15 to 20 years. This would secure Greece an indirect haircut compared with the expected future payment of interest.