Greece Debt Buybacks Raised by Merkel’s Economic Adviser Feld
April 20, 2011, 3:44 AM EDT
By Tony Czuczka
April 20 (Bloomberg) -- Greece will probably have to restructure its debt, and bond buybacks are a possible solution, said Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers.
A restructuring “only makes sense if private creditors are involved,” Feld told Deutschlandfunk radio today. Giving Greece more time to repay bailout loans would be another way to ease the debt burden, he said.
“I fear that Greece can’t get out of this situation without some kind of restructuring,” Feld said. While “that doesn’t have to mean an actual default,” it could include “the buyback of bonds through a European institution,” he said, without elaborating.
A restructuring probably wouldn’t have “major effects” on German banks that hold Greek debt, he said.
Almost a year after the European Union and International Monetary Fund bailed out Greece, investors must recognize that they have to share the cost “when a country over-indebts itself,” said Feld, an economics professor at Freiburg University who joined Merkel’s advisory panel on March 30.
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