Athens rescue veers off track A "strictly confidential" report on Greece's debt projections prepared for eurozone finance ministers reveals that Athens" rescue programme has veered off track and suggests the Greek government may need another bail-out once the second rescue agreed this week runs out. The 10-page debt sustainability analysis, distributed to senior eurozone officials last week but obtained by the Financial Times on Monday night, finds that even under the most optimistic scenario, the austerity measures being imposed on Athens risk a recession so deep that Greece will not be able to climb out of the debt hole over the course of the new €170bn bail-out. The report makes clear why the fight over the new Greek bail-out has been so intense in recent days. A German-led group of creditor countries - including the Netherlands and Finland - has expressed extreme reluctance since they received the report about the advisability of allowing the second rescue to go through. A "tailored downside scenario" prepared for eurozone leaders in the report suggests Greek debt could fall far more slowly than hoped, to only 160 per cent of economic output by 2020 - far below the target of 120 per cent set by the International Monetary Fund. Under such a scenario, Greece would need about €245bn in bail-out aid, nearly twice the €136bn under the "baseline" projections. "Prolonged financial support on appropriate terms by the official sector may be necessary," the report said, a clear reference to the possibility that bail-out funds may be needed indefinitely. Even under the most favourable circumstances, Greece could need an additional €50bn in bail-out aid by the end of the decade on top of the €136bn in new funds until 2015 being debated at a crucial eurozone finance ministers meeting on Monday night. That "baseline" scenario includes projections that the Greek economy will stop shrinking next year and return to 2.3 per cent growth in 2014. "The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned in the baseline," the alternate scenario warned. Greater wage flexibility may in practice be resisted by economic agents; product and service market liberalisation may continue to be plagued by strong opposition from vested interests; and business environment reforms may also remain bogged down in bureaucratic delays. The details of what issues have gone off course detailed in the report are long and daunting. A recapitalisation of the Greek banking sector, which originally was projected to cost €30bn, will now cost €50bn. A highly touted Greek privatisation plan, which originally hoped to raise €50bn, will now be delayed by five years and bring in only €30bn by the end of the decade. The report also paints a troubling outlook for the €200bn debt restructuring expected to begin this week. The deal involves a debt swap, where private investors trade in their existing Greek bonds for a package that includes €30bn in bonds issued by the eurozone's triple A rated rescue fund and €70bn in new, long-term Greek bonds. The analysis says the new structure, co-financed by Greece and the rescue fund, essentially creates a class of new, privileged investors which will chase off any new bond investors when Greek attempts to return to the bond market. Such a result could mean Greece will be forced to accept bail-out funding for the indefinite future, the report finds. "It is now uncertain whether market access can be restored in the immediate post-programme years," the report warned.