The International Monetary Fund believes Greece’s debt is unsustainable and that the country’s government should consider a restructuring as early as next year, the Wall Street Journal said
, citing three unidentified people familiar with the situation. Senior IMF officials have told European Commission and euro-zone governments that a restructuring should be considered, the paper said. IMF, which hasn’t recommended a restructuring of all the country’s debt, has considered extending its loan repayment schedule, IMF spokesman William Murray told the paper.
Euro-zone officials, including finance ministers, have said it is necessary to restructure Greece’s debt and the European Central Bank responded by saying it didn’t want a public discussion, an unidentified official familiar with the situation told WSJ. A first step would be to substantially extend Greek bond maturities, another unidentified official said, according to the paper. That may include extending debt repayments by as much as 30 years, the official said.
Greece’s central bank chief said Monday that a restructuring of the country’s giant public debt would have “disastrous consequences,” and called on the government to step up the pace of its reform program. “[A debt restructuring] is neither necessary nor desirable,” Bank of Greece governor George Provopoulos said. “It would have disastrous consequences for the access of the government and of Greek enterprises to international financial markets, as well as very negative effects on the assets of pension funds, banks and individuals holding Greek government securities.”