Find "projected debt-to-GDP ratio" where country = "Greece"; run eyeroll.exe Gary Jenkins of Swordfish Research aspired to have more thoughts on the latest Greek debt deal by Wednesday morning. Alas, it was not to be: I was hoping that having had a further twenty four hours to digest the Greek debt sustainability plan that I would have a lot to add to yesterday's comments, but I don't. There have been press reports (FT) that the measures to be implemented will only bring the debt/GDP figure down to 126.6% rather than the 124% announced but I think by now we are all used to the initial figures released being subject to revision pretty quickly. We agree - the figures around Greece always come with implied aspiration. As an FT report mentioned, it was based on a leaked document, available here courtesy of our colleague Peter Spiegel, who notes this about the latest moving target in his post on the Brussels blog: The key column to look at is the third, labelled "Debt level in 2020 (in % of GDP) ." This was the focus of most of the two weeks of negotiations between the International Monetary Fund and eurozone creditors. As the chart shows, without any debt relief, Greek debt would have stood at 144 per cent of gross domestic product in 2020. Furthermore: Of the various debt relief measures agreed, the chart shows by far the largest is the debt buyback programme. Even though senior officials have acknowledged they don't really know how much savings they'll get from the transaction, the assumptions are right there in black and white: They'll loan Athens €10.2bn (see first column under "Private Creditors: debt buy back operations") and expect to purchase enough bonds to cut Greek debt levels by 11 percentage points in 2020. In other words, well more than half of all debt savings will come from a programme of uncertain results. Feign shock and surprise about here Now, did you clock the footnote in the leaked document? Spiegel did, and here's an excerpt: Euro area Member States will consider further measures and assistance, including inter alia lower co-financing in structural funds and/or further interest rate reduction of the Greek Loan Facility, if necessary, for achieving a further credible and sustainable reduction of Greek debt-to-GDP ratio, when Greece reaches an annual primary surplus... Nice that they outright say it, even if in a footnote. Maybe there was a fuller discussion of it elsewhere in the document... Do head over to the Brussels blog for more of Spiegel's analysis. Back to jaded Jenkins for a delightful mix of humour and pragmatism, regarding the extension of maturities and interest payments on Greece's bilateral and EFSF loans, and what politicians are playing at: The advances to Greece might well come to be known as the Buzz Lightyear loans from a maturity standpoint: "To infinity...and beyond!" But just as long as cash is flowing into Greece then they don't have to default and I am sure that European politicians are hoping that one day in the future the economic situation will be looking very different, with very low levels of unemployment and prosperity across Europe, and at that stage they can write down Greek's debt because no-one will be quite able to remember why it was lent in the first place. On a more serious note what the politicians must fear is a situation where the Greek economy does not recover as per their plan and that continuing economic hardship leads to a change of government who run on a mandate of defaulting on the debt. It is important therefore that they bought themselves some more time to circle the wagons around Spain and the latest deal does do that. Related links: New Greek bailout: the leaked chart - FT Brussel's blog A "broader concept of debt sustainability" for Greece (feat. OSI-lite) - FT Alphaville A mere three weeks later, a Greek debt deal [updated] - FT Alphaville