Brussels, 26/03/2013 (Agence Europe) - Germany says that a future writedown of Greek debt is possible. Asked about this, the German finance minister, Wolfgang Schäuble, said in an interview with Greek newspaper Ta Nea on Tuesday 26 March that, if confidencer returns, it would be possible to study what can be done to stabilise the country.
In December 2012, German Chancellor Angela Merkel mentioned the same option in an interview with Bild Am Sonntag in answer to a question about whether debt owned by institutions could be written down in Greece, saying that, if Greece were able one day to live on its income without incurring further debt, then the eurozone would have to assess the new situation and look at the issue, but that would not happen until 2014 or 2015 (see EUROPE 10743).
Schaüble says that Greece has done the necessary: “Greece is on track to regain credibility. The more credibility it gains, the easier it will be for the country to continue getting the support it may need in the future.” Echoing Merkel's views, he said that, if Athens manages to get a primary surplus this year, then that would mean that the structural adjustment plan is working. Reflecting the debate about how austerity measures have a negative impact on growth in struggling countries, Schauble joined those in favour of austerity, arguing that the austerity drive in Greece was bearing fruit, as shown by macroeconomic indicators.
A year ago, private sector holders of Greek bonds agreed to a writedown in their face value that removed €107 billion from the country's debt. A repeat, this time called a “buyback”, in December 2012 removed a further €20 billion or so (see EUROPE 10751). Greece's eurozone partners have cut the interest rates on the country's loans, extended the repayment deadlines and returned some of the profits they've made on the loans (see EUROPE 10739) with the aim of reducing Greek debt to 124% of GDP by 2020. Euro Commissioner Olli Rehn said that, if necessary, further reductions in interest rates could be made, along with a reduction in the amount of cash Greece has to drum up as co-financing for aid from the EU Structural Funds. (EL/transl.fl)