Following on from this article, the goal (according to the Troika and the Greek government) is to pay down Greek government debt to 120% of GDP by 2020 and for the Greek government’s cost of servicing its debts to be around 6% of GDP (12 billion Euros a year) while operating a primary surplus of the same amount. These are the ballpark figures put forward.
Greek government debt is around 170% of GDP at the end of 2012 so the 120% figure will have meant the Greek government would have paid back 50% of GDP by 2020, or 100 billion Euros.
And this is in the context of the Greek government effectively exporting 6% of GDP (12 billion Euros) out of the country every year in debt serving costs.
I fail to see how this is a “sustainable” situation unless you call reducing a country’s GDP by 92% “sustainable”.
Assuming the Greek banks stop sucking credit out of the Greek economy and instead maintain the current credit levels in the Greek economy this sustainable situation will lead to the following on Greece’s 200 billion Euro a year economy.
A 50% (100 billion Euro) reduction in Greek GDP due to debt reduction.
And a 42% (84 billion Euro) reduction in Greek GDP due to debt servicing costs.
These two figures would mean a 92% decline in Greek GDP by 2020.
Even with these simple mathematics it is a plainly obvious to anyone with the slightest grip on the crisis in Greece that the figures being put forward by the Troika, the Greek government are a complete and total fantasy.
I am not for one moment suggesting that the Greek GDP will decline by 92%. The wheels will fall of the Troika “plan” well before then, the purpose of this article is simply to highlight the absurdity of the headlines concerning the Greek government, its ongoing negotiations with the Troika and the claims of “debt sustainability”.