The IMF’s preliminary draft debt sustainability analysis: what does it mean?

The release of the latest analysis by the IMF on the sustainability of the Greek debt, which states loudly that Greece will need not only a hefty new bailout but also a further debt restructuring, fueled again the literature, in traditional and social media, about the motives behind the insistence of the European institutions on continuing austerity. On a surface reading, the message is clear: if the debt is unsustainable, we either cut it or let Greece default; but we cannot expect the debt to become sustainable by imposing further austerity to Greece. Posts in social media proliferated, arguing that “the IMF knew this all along”, that “this shows how the Germans simply want to crush the Greek economy and society”, and how this is an admission that the debt-forgiveness arguments by Greece’s anti-austerity government are in reality accepted even by “its enemies”. [Incidentally, my friend Yiannis (with two ‘n’) has been telling me this for years now, well before the IMF finally ‘admitted’ to it.]