The programme will cover a three-year period. The euro area Member States are ready to contribute for their part up to 30 billion euros in the first year to cover financing needs in a joint programme to be designed with and cofinanced by the IMF.
Financial support for the following years will be decided upon the agreement of the joint programme In order to set incentives for Greece to return to market financing,
That\’s just the first year committment.
As the best economics book of the past year says (This Time is Different) points out, as a country begins to get into trouble the maturity of the debt issued falls. Quite simply, people are less willing to buy 20 or 30 year bonds but willing, for a price in interest of course, to lend for two or three years, for 6 months. Which means that ever more debt has to be issued for those shorter maturities need to be rolled over.
One of the saving graces of the UK position is the relatively long average maturity of our debt. One of the Greek problems is the relatively short average maturity of theirs. 30 billion (45 if we include the IMF contribution) round and about covers only the refinancing of extant debt necessary this year. I wouldn\’t be at all surprised to find that another 50 -60 billion needs refinancing next year (ie, the total amount refinanced this year, including market raised funds) and the same sort of amount in year three. Possibly more.
This is all before anyone tries to finance the current deficit.
Those eurozone countries are on the hook for a lot more than that headline figure that\’s all over the papers.