EU open to later debt re­pay­ment, not for­give­ness

Financial Mirror (Cyprus) - - FRONT PAGE -

Europe showed a will­ing­ness on Mon­day to give Athens more time to pay its debts, but lit­tle sign that it would yield to a new Greek gov­ern­ment’s de­mands for debt for­give­ness.

Euro­pean Union lead­ers and pol­i­cy­mak­ers re­sponded to Greek anti-bailout party Syriza’s elec­tion vic­tory on Sun­day with warn­ings that a debt re­duc­tion for Greece would be against eu­ro­zone rules and would send the wrong mes­sage to other bailed-out mem­bers of the sin­gle cur­rency, in­clud­ing Cyprus.

Be­fore any talks on more time for Greece to re­pay its debts can start, Athens must get an ex­ten­sion of its ex­ist­ing bailout to give it­self time for ne­go­ti­a­tions on fu­ture eco­nomic pol­icy and on longer loan ma­tu­rity with in­ter­na­tional lenders.

“My fore­cast is that an ex­ten­sion of the (Greek bailout) pro­gramme will have to hap­pen,” Thomas Wieser, who heads the Euro Work­ing Group that pre­pares de­ci­sions of eu­ro­zone fi­nance min­is­ters, told Aus­trian broad­caster ORF.

Syriza of­fi­cials have pre­vi­ously said their gov­ern­ment’s first pri­or­ity would be to ask lenders for a few months of time so both sides can dis­cuss their po­si­tions from scratch rather than pick­ing up from where the pre­vi­ous gov­ern­ment left off.

They re­sist the idea of ex­tend­ing a bailout pro­gramme that they are staunchly op­posed to. Tsipras last week dis­missed the Fe­bru­ary 28 dead­line when the bailout ex­pires, say­ing he had un­til July to ne­go­ti­ate with lenders.

The ex­ten­sion of the bailout is needed be­cause with­out it Athens will not be el­i­gi­ble for the Euro­pean Cen­tral Bank’s plan of gov­ern­ment bond pur­chases and pri­vate in­vestors would not lend to it ei­ther.

The chair­man of the group of eu­ro­zone fi­nance min­is­ters, Jeroen Di­js­sel­bloem, said there was very lit­tle support in Europe for writ­ing off Greek debt.

Ar­riv­ing for the eurogroup meet­ing on Mon­day, Di­js­sel­bloem con­grat­u­lated the win­ning party, say­ing: “We stand ready to work with them as we have al­ways worked with pre­vi­ous Greek gov­ern­ments.” He said that ex­ten­sion of the pe­riod for re­pay­ment of Greece’s debt would be the first thing un­der dis­cus­sion be­tween the eurogroup fi­nance min­is­ters and Greece, but added that a for­mal re­quest for ex­ten­sion must come from Athens be­fore it could be agreed.

Di­js­sel­bloem said that dis­cus­sion would also cen­tre on the ‘sus­tain­abil­ity ‘ of Greece’s debt, though he de­clined to go into more de­tail on what that may mean.

Euro­pean Cen­tral Bank board mem­ber Benoit Coeure said the ECB would not take part in any debt cut for Greece, but changes to the debt ma­tu­ri­ties were pos­si­ble.

Ger­many’s EU Com­mis­sioner, Guen­ther Oet­tinger, said a debt re­struc­tur­ing for Greece would send the wrong mes­sage to other coun­tries in the eu­ro­zone.

“If we cut debt (for Greece), that would give the wrong sig­nal to Por­tu­gal or Ire­land, Cyprus or Spain,” he told Ger­man ra­dio Deutsch­land­funk.

The IMF also said Greece treat­ment for its debt.

“There are in­ter­nal eu­ro­zone rules to be re­spected,” IMF chief Chris­tine La­garde told Le Monde daily. “We can­not make spe­cial cat­e­gories for such or such coun­try.”


not de­mand


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