to - gdp ratio is projected to increase significantly from 2022 onwards to likely 6 % of gdp under reasonable interest rate scenarios. this will impose significant challenges to debt sustainability looking forward. bis central bankers ’ speeches • hence, smoothing interest payments over time ( in particular over the period 2022 – 2030 ), along the lines of the eurogroup decision of 27 november 2012, will provide significant positive effects on growth and improve debt dynamics without imposing costs to creditors. • research at the bank of greece suggests that smoothing the interest - to - gdp ratio over the critical period of 2022 – 2030 by gradually removing interest payments to future years may have a significant positive impact on growth of the economy and lead to a faster reduction of the debt - to - gdp ratio to sustainable levels by 2035. • in the short term, i. e. over the period 2015 – 2022, if a swap of imf loans ( which come at a higher cost ) with esm loans ( which come at a low cost and have a much longer duration ) could occur, this would have improved debt dynamic considerably. 3. can ageing societies overcome the risks of stagnating economic growth? how will their governments bridge the generational gap without alienating either the young or the old? advanced economies face increasing age related challenges. the decline in fertility rates and the increases in life expectancy have increased the share of old - age in total population. in the future the challenges will become more pressing – for example in the case of greece, according to the 2015 ageing report of the european commission, the share of elderly population ( 65 and over ) as a % of total population is expected to increase from 20. 3 % in 2013 to 33. 0 % in 2060. while the share of very elderly population ( 80 and over ) as a % total population is projected to increase from 5. 8 % in 2013 to 15. 3 % in 2060. this trend reflects increased life expectancy ; • for men it is projected to be 84. 9 year in 2060 from 78. 0 in 2013, while • for women it is 89. 0 years in 2060 from 83. 3 in 2013. the fertility rate is projected to only marginally increase to 1. 58 in 2060 from the very low of 1. 34 in 2013. given that labor supply and savings are higher among working age adults than among those aged 65 or above, it can be expected that a country with a large

cohort of elderly is likely to experience slower growth than one with a lower elderly share. nevertheless, future behavioral changes cannot be excluded – for example, individuals might decide to increase saving over their working - life in view of the projected increase in life expectancy. ageing societies are expected to face mounting health and pension spending pressures putting at risk public finances which, in turn, will further reduce future growth prospects. there are various policy options to address the ageing related future growth challenges. first and foremost, it is important to fully utilize the labour input by taking actions to increase the employment rate. a low employment rate implies that a significant part of the working age population is either unemployed or inactive ( outside the workforce ). for example in greece ( according to the 2015 ageing report ) the employment rate ( for the age group of 15 – 64 years old ) was 48. 7 % in 2013 on account of very high unemployment ( about 28 % for ages 15 – 64 ) and low labour force participation, in particular, for the age group 55 – 64 ( 42. 4 % ). therefore action should be taken to • first, address the very high unemployment because it can have severe long term repercussions, though the hysteresis effects, as it can induce people to drop out of the labour force. at the same time, long term unemployment leads to human capital erosion and a fall in potential growth – translating a cyclical problem into a structural one. bis central bankers ’ speeches • second, action should be taken to raise the currently low participation rate by females and older individuals. for example countries facing these challenges should adopt policies that discourage age and sex discrimination by employers, promote life - long learning and education, allow for more flexible work arrangements for older workers and women, and increase state - funded child care provisions. furthermore, policy makers should also consider increasing the statutory retirement age when this is low by international standards. alternatively, an already high statutory retirement age might have to be made binding by limiting the early retirement schemes. in addition, a life expectancy component could be build into the social security system. finally, migration policies might have to be reconsidered as a whole in europe in view of the future demographic pressures. besides the abovementioned policies aiming at better utilizing the labour input, additional policies should be put forward such as increasing infrastructure investment, facilitating business investment and adopting reforms that can permanently boost the level of potential output and its growth rate in the medium term.