Linking payments to GDP growth should be the future of international lending

“You want me to trust you?” “No, no! Just take a gamble.”

Greece’s debt repayment idea is worth listening to. Linking payments to GDP growth should be the future of international lending

However, Schäuble does have a legitimate reason to be skeptical. Growth-indexed debt requires credible GDP data, and Greece’s data aren’t credible. After all, it was the country’s chronic fiddling of its public deficit numbers that touched off this crisis. Greece’s government reacted badly when the jiggery-pokery was revealed: It threw in jail the head of the government statistical office (and former IMF economist), Andreas Georgiou, who revealed the fraud. At the time, Georgiou noted “I am being prosecuted for not cooking the books… Unfortunately, in Greece statistics is a combat sport.”

So don’t trust Greek numbers. Instead, end the impasse between Athens and Berlin by stationing a few more EC and IMF economists in the Greek statistical agency. Parachute in a whole flotilla of them, make sure Greek data are sound, and tie Greece’s future debt payments to its economic success. The salaries of these statistical gurus would be nothing compared to the collateral damage that would be wrought if Greece and Germany remain at loggerheads, the troika program lapses, and Athens defaults on its debt

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