IMF:Still Targeting 120% Debt-To-GDP Ratio For Greece

Further International Monetary Fund involvement in a Greek loan program must be fully financed and a debt deal with private bondholders must meet the IMF’s preset debt target, a senior fund spokesman said Thursday.
Meanwhile, the bank group negotiating a debt swap deal with Greece in Athens failed to reach the common ground needed for an expansion of the loan program for the debt-beleaguered country. Officials at the Institute of International Finance said key issues remained unresolved in talks Thursday, and time was running out for a voluntary deal.
Chief IMF spokesman Gerry Rice said the fund is still targeting a debt-to-gross domestic product ratio of 120% by 2020. Further IMF loans to Athens would be based on that benchmark, meaning that any deal with boldholders negotiating the write-down on their holdings would have to be deep enough to reach that threshold.
The IMF’s chief economist said recently that based on the deeper than originally forecast recession in the euro zone, bondholders may have to take a steeper discount on their bond losses to meet the debt targets.
IMF staff reports indicate anything beyond the 120% ratio would be unsustainable in the long term.
It also may require more public funding from Europe to cover a growing financing gap.
“We always require full financing of any program,” Rice told reporters in Washington.
“We need to wait and see what the details of the final conclusion of the deal are, make an assessment on that, how it meets the debt sustainability targets that have been set and then the combination of PSI and official financing that might be required,” Rice said.
(source: Dow Jones)