OECD Says Greek Debt Repayments Must be Made Sustainable

Greece’s “remarkable reform effort of the past two years” needs to be supported by steps to make its debt repayments sustainable, the head of the OECD said on Monday.
Speaking in Athens during a high-level visit to unveil the 35-nation group’s Economic Survey of Greece, OECD Secretary-General, Angel Gurria said:
“The reforms undertaken by Greece have finally started to bear fruit. It is an impressive achievement. With strengthened public finances and a much improved macroeconomic framework, addressing poverty and raising living standards is a priority.”
However, although the OECD says Greece’s recovery is “finally gaining traction” with progress in labor reforms, competitiveness and GDP growth, the issue of non-performing loans needed to be tackled.
International pressure to make Greece’s biggest banks increase their provisions against bad loans has already seen the country’s major institutions take up billions of euros in cover.
Greece’s four largest banks have reported an aggregate burden of €5.25 billion ($6.5 billion) to comply with new accounting rules as European stress tests loom. The results are expected in May.
“Additional public debt restructuring, as needed, and continuing to reduce banks’ non-performing loans, would diminish such vulnerabilities and boost confidence,” the OECD said in a statement.
Greece is still in talks ahead of its planned exit from the bailout program in August. However, international creditors have said any debt restructuring needs to be linked to growth progress.
Last week, German newspaper Handelsblatt reported that Berlin was opposed to granting debt relief without strict conditions. The financial newspaper cited German finance ministry documents.