Equally unclear is how the country can reduce its sovereign debt load to a bearable 120 percent of gross domestic product by 2020. The Greek government's current budget proposal envisions this year ending with a debt load of 169 percent of GDP. In 2013, it will be 179 percent of GDP. "The debt level is extremely high," says Jens Boysen-Hogrefe of the Kiel Institute for the World Economy. "Given current conditions, the country won't likely be able to handle it."
Greece's spiralling debt load is primarily a function of the country's abysmal economy. In the last four years, the Greek economy has shrunk by fully 20 percent with economists expecting a further 6.5 percent drop this year. Athens expects that 2013 will see the economy shrink by an additional 3.8 percent, but most economists are more pessimistic.
The further the economy shrinks, the more difficult it becomes for Greece to pay the interest on its debt. "Thanks to the austerity packages, the Greek budget, minus interest payments, is largely balanced," says Boysen-Hogrefe. "The country requires external aid almost exclusively to service its debt."
http://www.spiegel.de/international/europe/ongoing-greek-debt-problems-overshadow-merkel-visit-to-athens-a-860264.html
Greece's spiralling debt load is primarily a function of the country's abysmal economy. In the last four years, the Greek economy has shrunk by fully 20 percent with economists expecting a further 6.5 percent drop this year. Athens expects that 2013 will see the economy shrink by an additional 3.8 percent, but most economists are more pessimistic.
The further the economy shrinks, the more difficult it becomes for Greece to pay the interest on its debt. "Thanks to the austerity packages, the Greek budget, minus interest payments, is largely balanced," says Boysen-Hogrefe. "The country requires external aid almost exclusively to service its debt."
http://www.spiegel.de/international/europe/ongoing-greek-debt-problems-overshadow-merkel-visit-to-athens-a-860264.html
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