The Greek debt

The International Monetary Fund will on February 6 likely deal a blow to Germany's ambition to involve it in the current Greek bailout. On that day it is expected to declare the Greek debt unsustainable, which bars it from involvement. An IMF report prepared for the meeting, leaked to Kathimerini and the Financial Times, says the Greek debt, which is currently worth €330bn, or 180pc of GDP, will grow to 275pc of GDP in the next four decades.

The debt’s sheer size threatens not only to unravel the bailout. It is the principal cause of Greece's inability to grow. The government has to impose such high taxes to keep up payments to creditors, there is little money left over for re-investment in new business.

New figures from the General Secretariat of Public Revenue show that Greeks reneged on a record level of tax obligations last year -  €13.9bn. Together with past tax arrears, the total is a record €95bn, about half the value of the economy. The government has managed to produce a surplus in 2016, but only by withholding vast amounts from its suppliers, which further starves the economy.

Against this backdrop of institutional gridlock, the Greek government is also at an impasse regarding the implementation of the next round of austerity, which it feels will spell political suicide. Without those measures, Greece will be unable to receive more loan instalments. Economists give it until July to go bankrupt if nothing is done. 

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