Debt relief for Greece rejected

19 May 2016

acrop Germany is holding steadfast in its opposition to debt relief for Greece.

Threadbare Greece has been pushing to get its EU creditors to write off at least some of its debts, arguing that it can not sustain its heavy loan repayments.

Jeroen Dijsselbloem, leader of the Eurogroup – an informal group of eurozone ministers – has said he wants the question to be on the agenda of a euro area finance ministers meeting at the end of May.

But a document from Germany’s finance ministry has been reported to say that any relief should happen only in 2018 after Greece has complied fully with the terms of its bailout.

"Last June, Eurogroup had said it was ready, if necessary, to examine additional measures to maintain a sustainable level for the financial needs of Greece," according to the document seen by AFP.

"These measures would be granted on condition that the (rescue) programme has been fully implemented in 2018," it added.

The German parliament must approve any bailout plan or substantial modifications to existing ones, including debt relief. Shunting the problem to 2018 means that such a vote would not have to take place before next year’s general election.

German voters appear uneasy about helping to fund the €86-billion bailout for Greece. Germany itself had to undergo tight austerity measures to get back steady economic ground and many feel that Greece should do the same.

But the IMF believes the Greek debt load is unsustainable and has called for debt relief. It is reported to believe that Greece should be allowed to miss interest payments on loans until 2040.

Comments

0 #6 Millicent 2016-05-20 16:05

Never forget that Greek debt haircuts leads to instant Portuguese requests for hair cuts. Ireland is powering forward again, motoring and Spain likewise. But the billions lent these countries also need factoring in .... and can anyone say that Portugal has made any substantial changes to its 'structure' ?
The public sector is as inflated as ever. The restrictions on competition by outsiders as tight as ever. Has Portugal learnt anything whatsoever since 2008 - over 20 years since it joined the EU?

+1 #5 Sharky 2016-05-20 12:14

Quoting dw:

Instead of lending more to Greece to the ECB could just write off the debt with a click of a mouse. Quantitative Easing involves creating trillions of euros from nothing in a computer and giving them to the banks. Greece's debt is only a few hundred billion. When banks are in trouble governments can summon trillions to bail them out. Why not do the same for countries that need rescuing?

Because with Greece's current budgetary expertise it would take the country a matter of minutes to be back in a similar position.

+2 #4 dw 2016-05-20 11:20

Instead of lending more to Greece to the ECB could just write off the debt with a click of a mouse. Quantitative Easing involves creating trillions of euros from nothing in a computer and giving them to the banks. Greece's debt is only a few hundred billion. When banks are in trouble governments can summon trillions to bail them out. Why not do the same for countries that need rescuing?

+3 #3 Peter Booker 2016-05-20 09:52

Greece is unable to meet its financial obligations. Its lenders (who should not have lent so much money to an underperforming economy) have required the Greek government to make changes to the economic model so that Greece will be able to begin to pay back what it owes. A bit like renegotiating a mortgage. The Greeks do not want their terms renegotiated; they want their house to be paid for by their building society.

Their building society is Germany, and the Germans want the Greek economy to work better, as live aboard says, so that Greeks can continue to buy BMWs. The Greeks want the BMWs, but they do not want the pain of changing.

So long as the euro exists, the prospect of the same scenario developing in Portugal looms ever larger.

+1 #2 Verjinie 2016-05-20 09:47

We haven't forgotten the huge amount of skulduggery that went on at the time of Greece's entry into the EU and then into the euro. Now Germany (while France watches and Italy prays) is playing Holier Than Thou - despite Schaúble having been prosecuted and, yes, SHOT in the also not so long-distant nor forgettable past.
What goes 'round..

+3 #1 liveaboard 2016-05-19 22:19

Germany has an powerful export oriented industrial base that was able to pay the bills.
Greece has no such thing.
If Germany wants Greece as a customer for their industrial goods, they'll need to help figure out how to get their economy working again.

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