The Greek debt can soar up to 258.3% of GDP or to fall to 62.6% of GDP by 2060, according to a Wall Street Journal report.
The report is based on a debt sustainability analysis (DSA) conducted by the European Commission.
The analysis examines four different scenarios. Under the most pessimistic estimates, state debt can soar up to 258.3% of GDP, whereas under the most optimistic scenario, it will drop to 62.6% of GDP.
According to the baseline scenario — which in most cases is the most likely — the Greek debt will reach 104.9% of GDP in 2060. This year it looks like it will be at 182.9% of GDP.
The analysis also examines the total financing requirements over the long term. “The high debt as a percentage of GDP and the high financing requirements, again as a percentage of GDP, raise serious concerns about the sustainability of Greek debt in the long term,” it is highlighted in the analysis.
It should be noted that the creditors believe that the record of actual financing needs of Greece is a better measure for debt sustainability, and thereby reflects the country’s ability to repay its debts.
Note that under one of the conditions set by the International Monetary Fund, the total financing needs of a country should be lower than 15% of GDP, in order for the country to be creditworthy.
Furthermore, the most pessimistic scenario says that Greece will have to find funds amounting to 62.8% of GDP by 2060 to meet its financing needs. According to the basic scenario, the financing needs will reach 24.3% of GDP in 2060.
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