Staikouras & Parliament Budget Office Hint at Haircut

Speaking at a conference organized by the Center for Planning and Economic Research (KEPE) Mr. Staikouras referred to the state of the economy noting the complexity of the issue.

The reference, however, was interpreted in many quarters as an insinuation for a new haircut. This is in tune with the latest quarterly report from the parliament's Budget Office which notes that according to the troika's plan, debt servicing will not be viable without a "haircut".

As the report notes, if GDP growth reaches 3.5% by 2022 (instead of the 4.5% foreseen by the basic scenario adopted by the troika) and interest rates rise from today's historic low of 3.5% to 4.5%, then fiscal surplus would have to be 8.7% to service the debt. This is almost 3 percentage points over what the working hypothesis foresees.

In any event, the report states that as long as reforms are delayed this will affect the economic situation negatively and narrow any bargaining leeway.