A restructuring of Greek debt will not relieve the country
from the painful prospect of significant fiscal adjustment. Nor
will it displace the need for financial support from the
official sector. But it may change how some of those funds are
spent (for example, backstopping the domestic banking system as
opposed to paying off maturing debt in full). In light of the
110 billion ($136 billion) EU/IMF bailout package for
Greece announced during the first week of May 2010, a debt
restructuring may possibly be avoided. Possibly. But, if not,
how would Plan B work?
Greece's total debt at the end-April 2010 was approximately
319 billion. Of that figure, the vast majority
approximately 294 billion was in the form of
bonds, with another 8.6 billion issued as Treasury bills.
Virtually all of this debt stock was denominated in Euros.
Small amounts (in aggregate, less than 2%...