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2nd UPDATE: Germany, Greece Deny Report Of Debt Buy-Back
(Adds comments by German finance ministry spokesman)
By Geoffrey T. Smith
Of DOW JONES NEWSWIRES
FRANKFURT (Dow Jones)--The German government is considering a plan that would allow the Greek government to retire some of its debt early, using subsidized credits from the European Financial Stabilization Facility, the weekly newspaper Die Zeit said in a report, which was denied by Athens and Berlin Wednesday.
The article said the German government could approve such an offer in return for new commitments by Greece to a "stability-oriented policy."
"The German Finance Ministry emphatically rejects that the federal government plans or works on the possibility of a debt restructuring of Greece," German finance ministry spokesman Martin Kreienbaum said in a statement.
Plans to restructure Greece's debt don't form part of the euro zone's current considerations to come up with a sustainable overall strategy to stabilize the currency zone, Kreienbaum added.
A Greek finance ministry spokesman said: "The Greek government's position remains unchanged and there is no such discussion going on."
The idea outlined is the latest in a series of reports to suggest that leading figures both in Athens and elsewhere in the euro zone have come to the conclusion that Greece's present debt burden is unsustainable and needs to be reduced somehow, all of which have been officially denied.
The report comes a day after Greek Finance Minister George Papaconstantinou had denied that any such plan was in the offing. Papaconstantinou had said there are "absolutely, no plans or talks to restructure debt."
Marco Valli, chief euro-zone economist at Unicredit in Milan, said "it would make sense that discussions of this kind are taking place" given that Greece's debt burden and the economic adjustment plan drafted by the International Monetary Fund and the European Union are, in their current form, probably unsustainable.
"Greece has not just liquidity problems, but a solvency problem," Valli said, although he said the country has done better than expected in reducing its deficit and in pushing through structural reforms since it accepted the IMF/EU plan last spring.
Die Zeit also said Berlin is no longer opposed in principle to increasing the means at the EFSF's disposal. Although the facility is backed by EUR440 billion in guarantees, it in practice can only lend just over EUR255 billion without jeopardizing its AAA rating.
The newspaper said it expected any deal on the matter to be decided at an EU summit on March 24-25. A meeting of EU finance ministers earlier this week discussed the expansion of the EFSF but took no firm decisions.
(Adds comments by German finance ministry spokesman)
By Geoffrey T. Smith
Of DOW JONES NEWSWIRES
FRANKFURT (Dow Jones)--The German government is considering a plan that would allow the Greek government to retire some of its debt early, using subsidized credits from the European Financial Stabilization Facility, the weekly newspaper Die Zeit said in a report, which was denied by Athens and Berlin Wednesday.
The article said the German government could approve such an offer in return for new commitments by Greece to a "stability-oriented policy."
"The German Finance Ministry emphatically rejects that the federal government plans or works on the possibility of a debt restructuring of Greece," German finance ministry spokesman Martin Kreienbaum said in a statement.
Plans to restructure Greece's debt don't form part of the euro zone's current considerations to come up with a sustainable overall strategy to stabilize the currency zone, Kreienbaum added.
A Greek finance ministry spokesman said: "The Greek government's position remains unchanged and there is no such discussion going on."
The idea outlined is the latest in a series of reports to suggest that leading figures both in Athens and elsewhere in the euro zone have come to the conclusion that Greece's present debt burden is unsustainable and needs to be reduced somehow, all of which have been officially denied.
The report comes a day after Greek Finance Minister George Papaconstantinou had denied that any such plan was in the offing. Papaconstantinou had said there are "absolutely, no plans or talks to restructure debt."
Marco Valli, chief euro-zone economist at Unicredit in Milan, said "it would make sense that discussions of this kind are taking place" given that Greece's debt burden and the economic adjustment plan drafted by the International Monetary Fund and the European Union are, in their current form, probably unsustainable.
"Greece has not just liquidity problems, but a solvency problem," Valli said, although he said the country has done better than expected in reducing its deficit and in pushing through structural reforms since it accepted the IMF/EU plan last spring.
Die Zeit also said Berlin is no longer opposed in principle to increasing the means at the EFSF's disposal. Although the facility is backed by EUR440 billion in guarantees, it in practice can only lend just over EUR255 billion without jeopardizing its AAA rating.
The newspaper said it expected any deal on the matter to be decided at an EU summit on March 24-25. A meeting of EU finance ministers earlier this week discussed the expansion of the EFSF but took no firm decisions.
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che dire....
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