Another current and ongoing headache for European officials is the high Greek debt burden. The country is once again at odds with creditors on the implementation of austerity measures, increasing the chances that Athens may default on its own debt in July when repayment deadlines hit.
“The amount (of) outstanding bonds with private investors is only to the tune of 17 billion euros ($18 billion) , that’s very small relative to the overall stock of debt outstanding, and the majority is indeed with the European Central Bank and that’s what the problem is, because any debt forgiveness would involve the European Central Bank and that smells very much like monetary financing which is, you know not entirely approved by the (European Union’s) Maastricht Treaty so that’s what the discussion is about,” Mary Pieterse-Bloem, global head of fixed income at ABN AMRO private bank, told CNBC on Monday.
The Greek debt-to-GDP (gross domestic product) ratio is expected to have increased from 177.4 percent in 2015 to 179.7 percent in 2016, and is estimated to then start declining in 2017, the European Commission said Monday.
According to Pieterse-Bloem, the current impasse between European creditors and the Greek government should be overcome, but only when Athens can no longer refuse doing what creditors want in exchange for fresh funds.
The impasse will be ended in the same way as it ended in 2015. “We are at the exact same spot, only at a higher GDP level,” Pieterse-Bloem added.
