Wall Street Journal
July 15, 2011
Euro-zone finance ministers admitted for the first time this week that they must reduce the burden that Greece's enormous government debt is placing upon the country's economy.
Easier said than done.
The ministers said Monday they will explore "steps to reduce the cost of debt-servicing and means to improve the sustainability of Greek public debt."
A "sustainable" debt burden is one that a debtor will be able to repay in full and on time, and that will eventually start to fall as a proportion of economic output. It's a term of art, rather than science. The International Monetary Fund continues to claim that Greece's public debt, forecast to rise above an enormous 160% of gross domestic product, is sustainable—even in the face of financial market incredulity.
While the ministers' statement suggests some efforts to relieve the weight of Greece's debt burden, it doesn't commit them to reducing Athens' €350 billion ($495 billion) debt stock.
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