Bruegel Institute Chief Zsolt Darvas said that there are two possible solutions for Greece’s debt problems following 2018. One is huge debt restructuring or a fourth bailout program for the country.
Speaking with Greek daily Ta Nea, the Hungarian economist said that even if Greece has the expected development for 2017-2018, debt will still be at a high rate. He does not believe that Greece will be able to borrow from the markets at a reasonable rate under the current circumstances.
Darvas expects to see some form of debt restructuring within a time framework to bond maturation, along with a lowering or freezing of interest rates. He said that this per se may still not be enough for Greece to avoid a fourth bailout program.
Regarding investments, Darvas said that the height of Greece’s debt is not helping draw investors. Another problem is the excessive bureaucracy. The OECD indexes also show Greece’s weaknesses.
When asked about U.S. President Barack Obama’s support for debt relief for Greece, Darvas said that he fears that Obama cannot influence European decisions regarding Greece. In the past, there were no results when he or other members of the government called for debt relief. He considers this unlikely to change. He does not believe that there will be any decision regarding debt relief until after the German elections.
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