February 2, 2015 / 8:10 PM / 5 years ago

UPDATE 1-Greek finance minister proposes swapping outstanding debt for growth-linked bonds - FT

(Adds details, quote, background)

LONDON, Feb 2 (Reuters) - Greece has proposed ending a standoff with its international creditors by swapping its outstanding debt for new growth-linked bonds, the new finance minister, Yanis Varoufakis, told the Financial Times in an interview.

Varoufakis also told the FT that Athens would no longer call for a write-off of Greece’s 315 billion euros of foreign debt.

Instead it will seek a “menu of debt swaps” including two types of new bonds - one indexed to nominal economic growth and one he called “perpetual bonds” to replace European Central Bank-owned Greek bonds, the FT reported.

“What I’ll say to our partners is that we are putting together a combination of a primary budget surplus and a reform agenda,” Varoufakis told the FT.

“I’ll say, ‘Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece’.”

The bonds indexed to economic growth would replace Greece’s European rescue loans, Varoufakis said.

Varoufakis also said Athens planned to target wealthy tax-evaders and post primary budget surpluses of 1 to 1.5 percent of gross domestic product, even if it meant his party, Syriza, could not fulfil all the spending promises on which it was elected, the FT reported.

Greece’s new prime minister, Alexis Tsipras, and Varoufakis are touring European capitals in a diplomatic offensive to replace the country’s bailout accord with the European Union, the ECB and the International Monetary Fund, known as the “troika”. (Writing by Hugh Lawson; Editing by Alison Williams)

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