The findings are part of a highly-anticipated report by the so-called troika of Greek lenders – the European Commission, International Monetary Fund, and European Central Bank – and sent to eurozone countries on Thursday morning.
According to the findings, European Commission monitors believe the next aid tranche should be paid “as soon as possible” following concessions by Athens to get its fiscal reform and privatisation programmes back on track. But the report paints a dire picture of the path ahead, saying Greece’s “debt dynamics remain extremely worrying”. “When compared with the outlook of a few months ago, the debt sustainability has effectively deteriorated given the delays in the recovery, in fiscal consolidation and in the privatisation plan, as well as the perspective of bank recapitalisation”, it finds.
Part of the reason for the delay is a standoff between two of the members of the troika – the IMF and ECB – over whether Greece can keep paying its debts without taking more stringent austerity measures. The ECB has taken a tougher line, while the IMF has urged more leniency. Still, tables included in the report show that Greece is expected to miss 2011 deficit targets set in July by €1.4 billion - €2 billion, money that will have to be raised either through additional bailout loans or further haircuts on private bondholders.
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