"And I think the European partners recognize this, which is why I think in the coming months you will see some moves to alleviate the pressure of public debt on the Greek economy." "You want to sort out the problems in the public sector but you aggravate them by squeezing too hard," Begg added. Merkel may now be playing down the possibility of a debt write-down, but Begg said he thinks that perspective will have to shift.Įuropean officials realize, he said, that Greece needs a new lifeline if its economy is to recover. About one-quarter of the population is out of work.Īs German federal elections loom, Mrs. Nonetheless, Greek finances remain dire and the countries' economy keeps shrinking. But it faces resistance from banks over plans for a greater private sector participation in Greek debt restructuring and moves to force banks to raise capital. Portugal, Ireland and Cyprus have also received bailouts, but their loans are dwarfed in comparison to the $400 billion Greece has borrowed. Greek debt write-down must be larger, German FinMin says. "It has a huge public debt and that debt is owed to foreigners." "Greece always has to be regarded as a special debt because it is much more extreme," Begg explained. Iain Begg from the European Institute at the London School of Economics said the Greek situation should be assessed in isolation. Hoping for a Quick Deal Striking a deal with private-sector banks is an important step in efforts to finalize a second. Such a move, she said, would lead to uncertainty for all investors in the euro area and call into question everything that has been done in recent years to stabilize the euro zone. Greece’s retreat from its call for a debt writedown may shift attention to the second front in Prime Minister Alexis Tsipras’s conflict with euro-area leaders: his desire to increase spending. Greece is hoping the debt write-down will be worth a total of 100 billion. She said if a so-called "haircut" were to take place, another country might also request a debt write-down. On Friday Merkel said the repercussions of a writedown would be bad for the eurozone as a whole. Merkel Rules Out Debt Writedown For Greece Germany's Chancellor casts doubts on a debt write-off for the new Greek government - as its banks are warned of a funding drought. On Thursday the German finance minister was in the Greek capital Athens and came bearing the same message. Speaking to reporters, she repeated her view that she does not see a debt "haircut" for Greece. Merkel held the chancellor's annual summer news conference Friday, giving her an important opportunity to address the media just months before Germans vote in the September federal election.Įurope's ongoing debt crisis is a major campaign issue and Greece was one of the main topics. But some analysts say a debt writedown might be exactly what's needed to keep the euro zone on track to recovery. Venizelos said an official offer to creditors had to be made by Friday, so a debt swap could be concluded by March 12 for maturities governed by Greek law, and by early April for debt issued under English and Japanese law.German Chancellor Angela Merkel has played down speculation that Greece could get a second debt writedown, saying that could destabilize the eurozone. The government hopes that 66% of private creditors will sign up to the bond swap deal, allowing Athens to impose a Collective Action Clause (CAC) to force hold-outs to accept the swap and losses as well. The law details terms of the so-called Private Sector Involvement (PSI) accord, agreed during the marathon talks in Brussels. Three leftist parties as well as the extreme right opposed the bill, saying it would "be profitable for banks and monopolies and not the population," according to communist deputy Thanassis Pafilis.Įurozone finance ministers agreed on Tuesday to provide Athens with loans of €130 billion, coupled with a 53.5% writedown of privately-held Greek sovereign bonds which should slash €107 billion from its total debt mountain of €350 billion.ĭuring a six-hour long parliamentary debate, Finance Minister Evangelos Venizelos urged unity as a way to "regain our pride and confidence of the markets." The vote on the private sector debt restructuring was not in doubt as the two coalition government partners, the Socialists in PASOK and the conservative New Democracy party, have 193 of 300 seats in parliament. The law sets rules and procedures for the debt restructuring and opens the way for parliament to take up legislation on further austerity cuts and tough targets required to get another €130 billion ($172 billion) in loans by 2014. The Greek parliament on Thursday approved a law on a historic €107 billion debt writedown with private creditors, a key element in a new eurozone bailout designed to avoid default.
0 kommentar(er)
