Greek total debt falls sharply after writedown

Greece’s unsustainable debt mountain has fallen sharply, official figures showed Monday, after an unprecedented private creditor writedown helped ease the burden on the struggling eurozone country. The office of the state comptroller said total debt, based on indicative figures, tumbled 23.8 percent to 280.3 billion euros ($370 billion) at the end of March compared with 368 billion euros at end-December. The data is not final nor complete enough to meet EU criteria, a finance ministry source said, adding that when all debt is included, the figure is expected to be higher. The sharp fall in the latest figures reflects a private-sector debt writedown worth some 107 billion euros which was included along with 130 billion euros in aid in the latest EU-IMF debt rescue agreed late last year. The aid, in the form of loans, will in due course add to the total debt, the finance ministry source noted. Under the agreement, Greece is supposed to see its total debt fall from the equivalent of 160 percent of Gross Domestic Product at end-2011 to 120.5 percent by 2020, still well above the 60-percent EU ceiling but more manageable. In May 2010, debt-stricken Greece secured a first EU-IMF bailout worth 110 billion euros but it was not enough to stabilise the country’s strained public finances and a second accord, including tough austerity measures, was agreed. The accord, however, was widely rejected by voters in May 6 polls and a second election on June 17 has effectively turned into a referendum on implementation of the deal and Greece’s continued membership of the eurozone. If the June 17 poll cannot produce a government that can live with the second debt accord, however that is managed, Athens faces the prospect of the aid lines being cut, default and then a likely exit from the euro.