Brussels, 20/01/2011 (Agence Europe) - A spokesperson for EU Economic and Monetary Affairs Commissioner Olli Rehn said on Monday 20 January that the idea of restructuring Greece's debt was “nonsense”. German newspaper Die Zeit reports that talks are taking place, examining the option of the EFSF (a fund set up in May 2010 to help the eurozone) buying up cheaper than the market rate Greek bonds (public debt) that it would then sell back to Greece as a way of giving the country one-off aid from the EFSF. This would amount to a restructuring of Greek debt. Holders of Greek bonds would have to decide whether to agree to bonds that are now worth less or whether to keep their initial bonds in the hope of them being repaid as agreed in the contract.
Klaus Regling, the EFSF's managing director, speaking on German radio, said: “The view of the IMF, the European Commission and the European Central Bank is that Greece does not need a restructuring of debt, that the markets overestimate that risk.” On Finnish television the day before, Rehn commented: “Restructuring of debt would cause a severe chain reaction by polluting other eurozone countries' government debt and banking system confidence.”
“The European Commission is confident that the decisions taken by the Eurogroup, the programme negotiated with EU/IMF and Greek authorities and, hopefully, the extension of the period for the repayment of the loans that is in the pipeline will indeed make that possible”, said Olli Rehn's spokesperson.
Interest rates. Two Green MEPs, Germany's Sven Giegold and Greece's Michail Tremopoulos, are calling in a press release that “the interest rate for the loans to Greece have at least to be reduced to the costs of borrowing by the financing member states. It is not acceptable and does not correspond to the European value of solidarity that Germany, France and the other member states of the Eurogroup try to make a profit from lending to the struggling Greek state.” They say that instead of further austerity measures, Greece needs a “Green New Deal” to boost investment in sustainable growth, and it also needs to slash military spending and boost the fight against tax evasion. On Wednesday, Athens received a further €6.5 billion in financial aid. (M.B./transl.fl)