ATHENS, Jan 31 (Reuters) - Stretching out Greece’s bailout loan repayment will help debt servicing but there is no official proposal on the table to extend it to 30 years, the country’s finance minister said in a newspaper interview on Monday.
On Friday, euro zone sources said European Union officials are considering extending euro zone bailout loans to Greece and Ireland to 30 years in a bid to draw a line under the bloc’s debt crisis. [ID:nLDE70U09M]
The sources said European Central Bank Governing Council member Axel Weber, head of Germany’s Bundesbank, had suggested stretching out the maturities from three years for Greece and seven for Ireland as part of a comprehensive package to overcome the crisis.
“There isn’t any official proposal on the table (on stretching the bailout loan repayment to 30 years),” Finance Minister George Papaconstantinou told Ta Nea newspaper in an interview.
“It is clear, however, that there are thoughts on how to improve the debt sustainability of countries like Greece with a longer repayment period,” he said.
Greece was the first country to receive a 110 billion euro EU/IMF bailout last May, and Ireland was granted 80 billion euros in emergency loans in December due to the huge cost of rescuing its shattered banking sector.
Concerns that Greece’s debt load, projected to hit 158 percent of GDP in 2013, will be too high to handle and may lead to some type of restructuring have kept yield spreads on Greek government bonds against German bunds at elevated levels of above 800 basis points.
Papaconstantinou said that extending the repayment period of the bailout loan, already agreed in principle by euro zone countries, would help Greece smooth out its debt repayments.
The emergency funding is about one third of the country’s projected total outstanding debt in 2013.
“I will state again that the bet for Greece is not what ‘repayment accommodation’ it will clinch but returning to a situation where we will be able to pay off our debt on our own. This will restore trust and set our relationship with markets,” he told the paper.
Ireland Labour Party, likely to join a new coalition after an election due within a month, said on Sunday the EU should consider giving Ireland an extra year, until 2016, to bring its budget deficit down to the 3 percent of GDP limit. [ID:nLDE70T0FN]
Reporting by George Georgiopoulos; Editing by John Stonestreet