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Bank Levy Better to Share Burden, Greek Minister Says
By Linda Yueh and Jeff Black - Nov 19, 2010 4:40 PM GMT+0100 Fri Nov 19 15:40:16 GMT 2010
Greek Finance Minister George Papaconstantinou said placing levies on banks would be a better way for them to share the risk of sovereign default than forcing bond investors to accept losses.
“I understand the concept of burden-sharing, but I think there are different ways of getting there,” he said today in an interview with Bloomberg TV in Frankfurt. “One way of burden- sharing would be to put more emphasis on things like bank levies or a financial activity or transaction tax.”
A debate over whether bondholders should have to assume losses when lenders fail was ratcheted up in Seoul last week, when German Chancellor Angela Merkel said creditors should bear more of the cost of bailing out banks and nations. Today, she said Germany and the Netherlands are working together to draft a permanent crisis-resolution mechanism, as the Dutch government backed her demand to make private investors shoulder more risk.
Government officials in Ireland, Portugal and Greece have criticized Merkel’s stance, saying it’s unhelpful as they struggle to slash debt levels. European Union leaders will meet next month to discuss the mechanism for indebted euro-area countries to come into effect from 2013.
“Some of the proposals that have been made are of a nature that would produce more deficits, so would not be helpful at the end of the day,” Papaconstantinou said.
‘Confident’ on Budget
Greece, which had its shortfall for 2009 revised to a euro- area record of 15.4 percent of gross domestic product this week, will meet pledges it made in May to the European Union and the International Monetary Fund to secure a 110 billion-euro ($150 billion) bailout, Papaconstantinou said. EU and IMF officials are in Athens this week, to assess progress in the plan to bring the shortfall to less than 3 percent in 2014.
Papaconstantinou said he’s “confident” the government will reduce its shortfall by 2 percentage points next year to 7.4 percent of GDP. The target was included in Greece’s final budget plan, released yesterday.
He ruled out a debt restructuring, saying that’s different than a possible extension of repayments of the EU-IMF loans. Greece’s gross borrowing needs will rise to 70.8 billion euros in 2014 as repayments to the EU and the fund increase, IMF documents show. The first repayment is due in 2013.
“The exact repayment schedule can at some point be discussed,” Papaconstantinou said. “What we are absolutely clear about is that we are under no circumstances talking about any kind of debt restructuring. That would be bad for the economy and would also send the wrong signal to the entire euro zone.”
(Bloomberg)
***
Anche qui il Ministro delle Finanze Papaconstantinou ribadisce la sua tesi contraria a qualunque tipo di haircut propendendo per il solo allungamento temporale dei rimborsi alla troika.
Come sappiamo il FMI si è reso disponibile mentre Frau Merkel non vuol sentirne parlare.
Spetterà dunque al Fondo di Emergenza intervenire a fine 2013, con tutte quelle complicanze di cui stiamo discutendo.
By Linda Yueh and Jeff Black - Nov 19, 2010 4:40 PM GMT+0100 Fri Nov 19 15:40:16 GMT 2010
Greek Finance Minister George Papaconstantinou said placing levies on banks would be a better way for them to share the risk of sovereign default than forcing bond investors to accept losses.
“I understand the concept of burden-sharing, but I think there are different ways of getting there,” he said today in an interview with Bloomberg TV in Frankfurt. “One way of burden- sharing would be to put more emphasis on things like bank levies or a financial activity or transaction tax.”
A debate over whether bondholders should have to assume losses when lenders fail was ratcheted up in Seoul last week, when German Chancellor Angela Merkel said creditors should bear more of the cost of bailing out banks and nations. Today, she said Germany and the Netherlands are working together to draft a permanent crisis-resolution mechanism, as the Dutch government backed her demand to make private investors shoulder more risk.
Government officials in Ireland, Portugal and Greece have criticized Merkel’s stance, saying it’s unhelpful as they struggle to slash debt levels. European Union leaders will meet next month to discuss the mechanism for indebted euro-area countries to come into effect from 2013.
“Some of the proposals that have been made are of a nature that would produce more deficits, so would not be helpful at the end of the day,” Papaconstantinou said.
‘Confident’ on Budget
Greece, which had its shortfall for 2009 revised to a euro- area record of 15.4 percent of gross domestic product this week, will meet pledges it made in May to the European Union and the International Monetary Fund to secure a 110 billion-euro ($150 billion) bailout, Papaconstantinou said. EU and IMF officials are in Athens this week, to assess progress in the plan to bring the shortfall to less than 3 percent in 2014.
Papaconstantinou said he’s “confident” the government will reduce its shortfall by 2 percentage points next year to 7.4 percent of GDP. The target was included in Greece’s final budget plan, released yesterday.
He ruled out a debt restructuring, saying that’s different than a possible extension of repayments of the EU-IMF loans. Greece’s gross borrowing needs will rise to 70.8 billion euros in 2014 as repayments to the EU and the fund increase, IMF documents show. The first repayment is due in 2013.
“The exact repayment schedule can at some point be discussed,” Papaconstantinou said. “What we are absolutely clear about is that we are under no circumstances talking about any kind of debt restructuring. That would be bad for the economy and would also send the wrong signal to the entire euro zone.”
(Bloomberg)
***
Anche qui il Ministro delle Finanze Papaconstantinou ribadisce la sua tesi contraria a qualunque tipo di haircut propendendo per il solo allungamento temporale dei rimborsi alla troika.
Come sappiamo il FMI si è reso disponibile mentre Frau Merkel non vuol sentirne parlare.
Spetterà dunque al Fondo di Emergenza intervenire a fine 2013, con tutte quelle complicanze di cui stiamo discutendo.
