Greece will have to restructure debt

Global financial markets continue to struggle with short-term effects of the debt crisis in Greece, while a very important problem which may manifest itself in the long term, remains - it is likely that Greece will have to restructure its debt, says Finmarket with reference to a publication in Wall Street Journal. Analysts do not think it can happen any time soon. Financial markets are currently very unstable to withstand such a blow, and the assistance provided by Greece, the European Union and the International Monetary Fund (IMF), gives this country a break. Many experts believe that Greece is still not able to avoid the need for restructuring the debt, despite assurances from representatives of the EU and the IMF in return. Nevertheless, the country probably will not restructure the debt in the next year or two. Speaking Wednesday at the passing of Bucharest Financial Forum U.S. economist Nouriel Roubini skeptical about prospects for the eurozone. Among the fundamental causes of the crisis in the region - lack of competitiveness of its constituent economies. Expensive programs to save the euro zone without tight binding to the financial reforms and cost reductions will not be allowed out of recession. On the contrary, the accompanying increase in taxes in the short term - a sure way to prolong the crisis, Roubini says. "All the funds are being occupied in conjunction with a set of certain conditions, and governments must make tough budgetary measures," - said Roubini. However, markets are not convinced that Greece is able to realize the financial transformation, "Bloomberg quoted the words of economist. According to him, "there are also questions about whether the plans provided for fiscal consolidation in those countries - Greece, Portugal and Spain - support from the political point of view." However, restoring competitiveness in the economies of the eurozone - the key condition for release in Europe out of recession. Restructuring of debt on the merits would be in default, and Greece would have to agree with the holders of bonds or extension of their treatment, or reduction in payment that will bring investors to losses. According to Standard & Poor's, in case of default on the debt of Greece bondholders will receive 30-50% of their investment. One of the reasons that experts believe it unlikely the Greek debt restructuring in the near future, is that much of the bond is in the hands of European banks and defaulted Greece could lead to huge losses of financial companies in the region. Expectations that Greece will not restructure the debt in the next two years, due to the fact that at the moment the country is forced to borrow to finance public expenditures, including salaries of civil servants. Thus, Greece is impossible to unnerve investors. However, by 2012, according to IMF estimates, the country's budget surplus will be about 2.4 billion euros, and the country will be able to finance themselves. In this situation, it can afford to restructure its debt, which may cause negative reaction of investors. The cost of the country to service debt are growing. In 2012, Greece will pay interest of about 17.1 billion euros compared with 11.9 billion euros last year. In 2014 the Greek debt rise to 353.8 billion euros, and it will pay interest to creditors in the amount of 20.4 billion euros. Given the high debt load Greece will seek to reduce interest payments, and this can be done, or to pay the debt or restructured it, economists note.