Bloomberg
Here’s one to add to your list of debt-crisis ironies: Europe’s debt-reduction champion in the first quarter was… Greece.
True, the much-maligned Greeks were challenged by the parsimonious Finns, but in the end it was no contest. Greek debt fell by 33 percentage points to 132.4 percent of gross domestic product in the quarter, Finnish debt by 0.4 point to 48.7 percent, according to today’s Eurostat data.
Debt was on the rise everywhere else, at the start of year three of the crisis. Aggregate debt in the 17-nation euro zone went up 0.9 point to 88.2 percent of GDP, with Portugal leading the pack.
Oh, there’s a Eurostat footnote that reads: “The decrease in the Greek government debt is mainly due to exchange of bonds in the context of the PSI (Private Sector Involvement).”
Thanks to PSI — shorthand for paying bondholders back at less than 100 cents on the euro — around 75 billion euros ($91 billion) of Greek debt went poof. It won’t happen again, less because euro leaders have declared PSI taboo than because most Greek debt is now held by official creditors.
For Greece to hold on to the debt-reduction title, it will need relief from the latter lot, led by the German government and the International Monetary Fund, under what is dubbed “Official Sector Involvement” or OSI. That abbreviation will be on everyone’s lips soon enough.
