Secret IMF document: Austerity won't help Greece

A secret IMF document shows an estimate that Greece, despite all austerity measures, would be at an unsustainable debt level of 118% of GDP by 2030, writes The Guardian, reports the news agency Patria.

The document, analyzed by journalists from the British newspaper and revealed by the German Suddeutsche Zeitung, shows that the International Monetary Fund, the European Central Bank, and the European Commission know that Greece, even by agreeing to all the demands of the creditor troika, will not solve its problems, but will practically only postpone bankruptcy.

The secret document practically supports the argument of the Greek authorities that the only solution for exiting the crisis and economic recovery is significant debt relief. The creditors' projection shows that even with 15 years of sustainable economic growth, Greece would reach a public debt level that is unsustainable according to IMF criteria.

The IMF set the maximum debt level for Greece in 2012 at 110 percent of GDP. Greece is currently at 175 percent, with the threat of it growing further, and even with all austerity measures and ideal conditions, it would be at 118 percent by 2030.

The document states that Greece needs "significant concessions" for a chance of recovery, and that even in the best-case scenario, with strict implementation of the requested austerity measures and economic growth of four percent in the next five years, Greek debt would only fall to 124 percent by 2022.

Furthermore, this scenario predicts 15 billion euros in privatization revenue, which is five times more than projected in the "realistic scenario." Even the third scenario, and all three imply a new, third aid program for Greece, does not predict a reduction in debt to the level foreseen in 2012.

"It is clear that the uncertainty of the previous months has led to the fact that in any case the goals from 2012 will remain unattainable," the document states.

These projections were published in the report "Preliminary Debt Sustainability Analysis for Greece," which is one of the six documents that make up the "final" proposal that creditors sent to Greece on Friday.

The IMF confirmed at midnight that Greece had not paid its debt of 1.6 billion euros, making it the first country in history not to meet its obligations to the IMF.

Unofficially, negotiations on a sustainable solution for Greece are underway in Brussels, but Greek Prime Minister Alexis Tsipras has scheduled a referendum for Sunday on whether the Greek people will accept the creditors' offer and their austerity measures.