GREEK DEBT: The Worst Case Scenario

We just published a chart from the Greek Debt Sustainability Analysis showing the rosy assumption of a return to GDP growth in just a couple of years.

Here’s another interesting chart from the report (via FT) showing the varying possible trajectories of Greek debt.

What’s interesting is that the line they call the “baseline” is obviously the best-case scenario, and that assumed the government achieve a primary budget balance of 4%.

On the flip side, if the government only achieves a primary budget surplus of 2.5%, Greek debt will quickly race back towards the 160% debt-to-GDP level, which nobody thinks is sustainable.

Greek Debt

Photo: Greece: Preliminary Debt Sustainability Analysis

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