Every step Greece takes to shore up its finances seems to make it harder for Athens to make the numbers add up in the long-term, especially when it comes to its spiralling debt. Monday’s 2013 budget plan contained some positive news – for example, the expectation that Greece will have a primary budget surplus, before debt financing costs, for the first time since 2002 – as well as some more alarming forecasts. Chief among those was an acknowledgement that the economy will shrink again next year, by 3.8 percent, the sixth annual contraction in succession, and that the debt-to-GDP ratio will rise to 179.3 percent in 2013, a dauntingly high figure. The bottom line is that Greece is in a worse state now than even the most pessimistic forecast just six months ago. The relationship between growth and debt is the focus of the European Commission, the European Central Bank and the International Monetary Fund — the troika of inspectors currently in Athens poring over the government’s projections. In the coming 4-6 weeks, the troika will publish its latest report assessing whether Greece’s debt is sustainable in the longer-term, something many private sector economists have already concluded is not the case. In its last analysis published in March, the troika said Greece needed to get its debts down to 120 percent of GDP by 2020 for the situation to be manageable and concluded the goal was achievable under certain optimistic assumptions.
