Greece can only recover if its debt is restructured, say economists

Guardian
December 16, 2010

Nouriel Roubini, the world-renowned economics professor known as Dr Doom, was in Athens last week with a message: the worst of the global financial crisis might be over but for Greece recovery could only occur with an "orderly restructuring" of its huge public debt.

Although he is dismissed by some as a permanent pessimist, his prediction of a Greek default is gaining traction in the EU's most indebted nation. Ahead of today's EU summit, a growing number of Greek financial experts have voiced fears about the sustainability of a debt projected to reach 160% of GDP when the country's €110bn EU and IMF-sponsored rescue package expires in 2013.

"Whatever Greece does won't be enough," says Theodore Pelagidis, who teaches economic analysis at Piraeus University. "Over the course of the next decade it will be forced to repay about €70bn on average in maturing debt every year. Whatever corrective structural measures it takes [to boost competitiveness] the demands of such colossal repayments will be impossible to meet without sharing at least part of the debt burden with its creditors."

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