FRANKFURT, July 28 (Reuters) - The euro zone’s latest Greek rescue package has not pushed the bloc closer to becoming a fiscal union, the head of its current bailout fund was quoted as saying, rejecting criticism by some German officials.
“The euro zone is in no sense a ‘debt union’,” European Financial Stability Facility (EFSF) chief Klaus Regling said in an interview with German mass-circulation newspaper Bild.
Euro zone leaders agreed on a 109 billion euro package for debt-stricken Greece last week and gave the EFSF the power to buy government bonds from private bondholders and provide lifelines to troubled euro zone banks and governments.
After the agreement, the head of Germany’s Bundesbank, Jens Weidmann, criticised the euro zone, saying it had taken “a big step toward collectivisation of risks”, with countries that have maintained solid finances having to take risks on behalf of others.
Regling said the latest bailout package was not about transferring debt, but about providing credit under clear conditions.
“No country accepts euro aid lightly. Because in return, the people of that country have to save rigorously for years and the government has to hand over some of its authority to the EU and the International Monetary Fund,” he said.
Regling added that so far no taxpayers’ money had been lost.
“And also in future, the EFSF will not act without the consent of the European Central Bank and the national governments — Germany has a veto at all times,” he was quoted as saying.
With the new bailout package, Greece will be able to reduce its debt ratio by “a good quarter” by 2020, Regling said.
Greece’s debt is now at about 150 percent of gross domestic product, after soaring to 143 percent last year from 127 percent in 2009. (Reporting by Eva Kuehnen; Editing by Susan Fenton)