Analyst says Greek debt 'haircut' too much to ask of EU

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Greece’s lawmakers were debating an austerity bill set for a midnight vote on Wednesday (July 15) that will condemn the country to years of more budget savings but is needed to get a new bailout and avert financial collapse.

The International Monetary Fund (IMF), which was involved in Greece’s previous two bailouts and will also play a role in the third, has issued a report saying Greece’s debt was now “highly unsustainable” and would reach “close to 200 percent of GDP in the next two years.”

Independent economist Vangelis Agapitos agreed with what the report outlined and said a “haircut” of the debt would help solve the crisis.

Analyst Vicky Pryce said the report gives a lot of credibility to what Greece has been saying all along.

“But in many ways what it is suggesting is that the IMF has had serious disagreements with the Europeans when they were putting the bailout package together,” Pryce said. “And that disagreement centres on whether anything that’s going on right now will allow Greece to go back to some sustainable growth path.”

Talks on a bailout package worth 85 billion euros over three years will start only if Greece’s government takes certain steps, including pushing through Wednesday’s bill.

The bill was being passed through parliament with emergency procedures and was being debated at committee level on Wednesday morning before it heads to the full assembly in the evening.

Demonstrations were planned for Wednesday evening outside Parliament during the assembly debate.