Even though a cloud of uncertainty has been lifted with moves by the Greek government to initiate new debt targets, many feel that Greece doesn't need debt reduction but growth to pump up the country’s financial barrel.  Charles Dallara, managing director of the Institute of International Finance (IIF) feels that this beleaguered European nation needs to restart its engines for growth to revive its economy.  According to Dallara, debt reduction just won’t cut it.  The economy in Greece is exceptionally weak, and the economy needs to be turned around and stabilized.

Dallara recently led negotiations with Greece to restructure the country’s debt help by the private sector.  After 10 hours of negotiations, Greece’s international lenders finally agreed to reduce Greek debt by $52 billion.  Currently, Greece’s sovereign debt is at 170 percent of GDP, making it one of Europe’s most heavily indebted countries.  In addition, its economy has shrunk by more than a quarter over the last five years, and unemployment has risen to a record 25 percent.  

Over 70 percent of Greece’s debts are now owed to official lenders, such as the International Monetary Fund and the European Central Bank.  Although Germany has declined further debt relief for Greece, private-sector bondholders represented by the IFF have agreed to write off some of the debt to assist Greece with debt reduction.  Unfortunately, Greece is expected to enter its sixth year of recession in 2013.  It appears all the ways that this country’s leaders have implemented for debt reduction hasn't helped the economy in Greece.  The rest of the world is wondering just how many times Greece can raise taxes and cut spending to comply with the demands  of its international bailout.

When compared to the debt reduction problems in the United States, it seems like Greece is a country in much direr straits.  


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