Debt lightening to be a win-win situation

The three main stakeholders in the Greek debt issue, namely the government, the European lenders and the International Monetary Fund, will have to agree that debt relief is unavoidable and should be compatible with realistic primary fiscal targets from the start. If debt relief is granted on a conditional basis and centered on maintaining the unrealistically high 3.5 percent of GDP primary surplus from 2018 onward, the outcome will be inferior since it will be more difficult for Greece to regain investor confidence and market access.

In the regular order of events, the Eurogroup would have approved the first program review before debt relief negotiations started. An agreement on debt relief would pave the way for the IMF's participation in the third bailout program, which is a precondition for more disbursements from the European Stability Mechanism (ESM). On Monday, at the...