October 12, 2010 / 11:23 AM / 9 years ago

UPDATE 2-Germany opposes extending Greek loan repayment period

* German finmin spox says Greece doing well with refinancing

* EU Commission plays down prospects of extension

(Adds European Commission reaction)

BERLIN, Oct 12 (Reuters) - Germany opposes extending Greece’s repayment period for its bailout loans as the country is doing well refinancing itself, a German finance ministry spokesman said on Tuesday.

Greek Finance Minister George Papaconstantinou told Greek Skai television on Monday that Athens was discussing prolonging the repayment period for a 110 billion euro ($153.4 billion) EU/IMF bailout deal. [ID:nLDE69A1YN]

On Sunday, the International Monetary Fund said loans to Greece could be stretched out or replaced if refinancing worries lingered in the markets, although it added it had no concrete plans for such an extension. [ID:nN10280920]

“As long as the Greeks are fulfilling the programme, which they are doing very well, there are no grounds for extending the repayment schedule,” the German spokesman said, declining to be named.

On Tuesday, Greece sold 6-month T-bills smoothly, with investors paying a lower risk premium, suggesting market conditions are improving for Greece. [ID:nLDE69B0C7]

A European Commission spokesman also played down the prospects of Athens getting more time to repay its loans and said Greece should be able to self-finance from 2012.

“All this suggests that Greece will be able to fully cover its external financial needs from the markets from 2012,” Commission spokesman Amadeu Altafaj told a regular briefing.

Germany, having largely underwritten a safety net set up in May for members of the single currency area to ward off a new sovereign debt crisis, is keen not to face any further obligations.

Last month, Chancellor Angela Merkel said Berlin would not agree to an extension of euro zone economic safety measures, adding that “other procedures” were needed to deal with problem European countries.

Greece kicked off a programme of monthly sales of short-term debt last month, switching from quarterly auctions in a bid to improve its cash management as it fights to keep a lid on its debt.

Late last month, yields on short-term Greek debt fell at auction for the first time since the country’s fiscal crisis emerged, following strong demand at a sale of three-month paper.

Papaconstantinou said late on Monday that Greece had not officially asked for such an extension but that potential problems could surface after 2012.

“This discussion has started because everybody sees that for two specific years — 2014 and 2015 — the state goes suddenly from paying off 40 to 50 billion (euros) a year to 70,” he told Skai’s News Files show on Monday.

Reporting by Brian Rohan; Editing by Mike Peacock, John Stonestreet

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