Read
- Microsoft unveils Xbox One with Spielberg, Activision tie-up
- Whole neighborhoods razed by Oklahoma tornado that killed 24
|
- White House threatens veto of bill to bypass Obama on Keystone
- Russia moves closer to jail terms for offending religion
- UPDATE 1-Regeneron, Sanofi asthma drug seen as potential game changer
Sponsored Links
German finance minister rules out Greek debt "haircut": radio
Germany's Finance Minister Wolfgang Schaeuble speaks during a news conference at the annual meetings of the International Monetary Fund
Credit: Reuters/Issi Kato
BERLIN |
BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble ruled out public investors accepting a debt restructuring, or "haircut", on their Greek bonds but said in an interview to be aired on Sunday that a debt repurchasing program could be considered.
"(A haircut) is a discussion that has little to do with the reality in the member states of the euro zone," Schaeuble said in an interview with Deutschlandfunk radio.
Schaeuble said sovereign states could legally not write off billions of euros of losses on their official holdings of Greek government bonds.
With frustration rising over a worsening recession and tough austerity reforms, Greek Finance Minister Yannis Stournaras said on Wednesday Athens was seeking a form of haircut by reducing the interest and extending the maturities of its bailout loans.
Schaeuble reiterated no agreement had been made on how to help Greece implement austerity cuts after Stournaras said international lenders had given Athens more time and a package of austerity measures would be put to parliament next week.
Any agreement with near-bankrupt Greece would have to be sustainable - last longer than six months - and be trusted by financial markets.
A deal on the package is crucial for Greece's efforts to unlock more aid under its latest bailout, with the country just three weeks away from running out of cash.
A debt repurchasing program, in which Greece would get new loans in order to pay back old debt, could be an option, Schaeuble said.
"That is a consideration that one can make seriously. It has been put up for discussion by some members of the central bank board."
But he refused to speculate on such a program until the troika of the European Central Bank, European Commission and International Monetary Fund had presented their final report on Greece's progress.
Schaeuble also said an agreement with Greece could include ideas such as cutting aid if spending went out of bounds.
"All those kinds of things - a control mechanism, a corrective mechanism - could perhaps restore the credibility we haven't so far reached for the Greek program," he said.
(Reporting by Annika Breidthardt; Editing by Helen Massy-Beresford)
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
Greece needs more money, so it is a matter of how to give it more aid rather will it get more aid from the troika. No one wants Greece to fail, but there are political constraints to helping Greece.
The IMF is prohibited from granting loans to countries who have an unsustainable debt burden, and the latest troika tests show just that. More IMF loans are out of the question, too.
There has been talk about buying debt back at reduced prices. The problem with this idea is that it has been out there for quite some time allowing speculators to bid up debt price to front-run the plan. If a real plan is announced, they will buy more raising the closer to par. A debt buyback plan simply will not put a dent in the €30bn more that Greece requires.
Since the obvious ideas have been eliminated by officials or practicality, consider this scenario. Greece issues debt under the auspices of the ESM, which partially guarantees it. This allows Greece to sell €30bn it needs to delay its austerity plan the requested two years.
We will see what happens soon enough.
dareconomics.wordpress.com
Follow Reuters