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Greece’s Payment Burden Soars

Mar 5, 2015

The financing of capital flight from Greece via the Eurosystem has sharply increased the country’s payment obligations to international public institutions. According to calculations by the Ifo Institute, these payment obligations rose to 319 billion euros, or 173 percent of Greece’s annual economic output, by the end of January.

“There is no way for Greece to avoid a third bail-out package, and further packages in the future, if it stays in the euro. It would be better for the country to formally default, exit and devalue, so that its real economy can get back on its feet,” says Ifo President Hans-Werner Sinn in Munich. “The country is practically bankrupt, but still continues to receive public funding. This is a way of delaying the bankruptcy, giving investors the opportunity to make a quick getaway at the expense of the Community of States.”

The 319 billion euro figure takes into account the net payments from the bail-out packages financed by the euro countries and the International Monetary Fund, purchases of Greek government bonds by other central banks, as well as Target overdraft credit and the credit in the form of disproportionate issues of bank notes in Greece.

If the Greek government and the country’s banks were to go bankrupt, the maximum sum of liabilities can be broken down into 84.7 billion euros lost by Germany (state and central bank), 64.6 billion euros by France, 56.4 billion euros by Italy and 38.4 billion euros by Spain. The Netherlands will lose a maximum of 18.3 billion euros, while Belgium will lose 11.4 billion euros, Austria 8.9 billion euros and Finland 5.7 billion euros. Portugal’s loss well be 3.8 billion euros and Slovakia’s 2.7 billion euros. The numbers cited above refer to the scenario of a Greece exit from the Eurozone, and thus to the more favourable scenario for the Community of States.

Should Greece remain in the euro, loans by Greece’s central bank to local commercial banks would feature in the total liability figure, instead of the Target liabilities and the disproportionate issue of bank notes. The losses would be slightly higher in this case, with Germany sustaining maximum losses of 85.2 billion euros as things stand, plus the additional costs of financing further bail-out packages to compensate for Greece’s lack of competitiveness. 


Tables featuring the maximum liabilities for ten euro countries (PDF, 149 KB)


Prof. Dr. Dr. h.c. mult. Hans-Werner Sinn

Ifo Institute
Executive Board
Phone: +49(0)89/9224-1279
Fax: +49(0)89/9224-1901
Email: sinn @

Press contact

Harald Schultz

Ifo Institute
Press, Publications, Conferences
Phone: +49(0)89/9224-1218
Fax: +49(0)89/9224-1267
Email: schultz @

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