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Greece's creditors close to writing off some of its debt
IMF chief and head of Eurogroup drop hints that international community may consider lightening nation's debt load
The Guardian, Sunday 2 June 2013 19.47 BST
Greece's international creditors are edging closer to accepting that they will have to lighten the country's monumental debt burden if its shattered economy is ever to be fully rehabilitated.
In an implicit recognition that the eurozone's weakest member state will never recover unless some of its debt is forgiven, the International Monetary Fund's managing director, Christine Lagarde, said that Athens' debt pile, projected to reach a staggering 185% of GDP this year, would remain high "well into the next decade".
"The assurances from Greece's European partners that they will consider further measures and assistance, if necessary, to reduce debt to substantially below 110% of GDP by 2022 … are welcome," she said at the weekend in a statement approving the disbursement of extra €1.7bn (£1.5bn) to the country.
Largarde's remarks came in the wake of the strongest evidence yet that eurozone nations providing the bulk of Greece's €240bn rescue funds – the biggest bailout in western history -- were also coming round to the once off-limits option.
The prospect of restoring debt sustainability through "official sector involvement" – or any other measure -- has been fiercely resisted by Germany and others as it would mean European governments incurring losses on bailout loans. But the Greek finance minister, Yannis Stournaras, confirmed that the issue of debt relief had been raised during a visit by Eurogroup president Jeroen Dijsselbloem last week.
"Our goal is to produce a primary surplus by the end of the year," he said, referring to the surplus that the government can achieve before debt repayments. "We want to do that so that we can ask for the appropriate measures to be activated by the Eurogroup to bring the debt down. [Dijsselbloem] repeated that this was something the Eurogroup would consider. He verified our plans."
Flying into Athens ahead of a review of the country's finances by auditors from the EU, ECB and IMF this week, the Dutch politician told reporters that the country's fiscal adjustment programme was on track, saying sweeping budget cuts and tax increases were finally paying off.
Stopping short of elaborating on what form debt relief would take, Dijsselbloem suggested that the Eurogroup could discuss the issue next year, provided that a primary surplus was recorded first. Loan instalments from creditors are due to end in May 2014.
"If Greece fully complies with its commitments, then we will be ready to do more to help it," he said. "We will meet sometime before the summer [of 2014] to examine what more Greece might need, always under the condition that the targets that have been set are achieved."
IMF chief and head of Eurogroup drop hints that international community may consider lightening nation's debt load
The Guardian, Sunday 2 June 2013 19.47 BST
Greece's international creditors are edging closer to accepting that they will have to lighten the country's monumental debt burden if its shattered economy is ever to be fully rehabilitated.
In an implicit recognition that the eurozone's weakest member state will never recover unless some of its debt is forgiven, the International Monetary Fund's managing director, Christine Lagarde, said that Athens' debt pile, projected to reach a staggering 185% of GDP this year, would remain high "well into the next decade".
"The assurances from Greece's European partners that they will consider further measures and assistance, if necessary, to reduce debt to substantially below 110% of GDP by 2022 … are welcome," she said at the weekend in a statement approving the disbursement of extra €1.7bn (£1.5bn) to the country.
Largarde's remarks came in the wake of the strongest evidence yet that eurozone nations providing the bulk of Greece's €240bn rescue funds – the biggest bailout in western history -- were also coming round to the once off-limits option.
The prospect of restoring debt sustainability through "official sector involvement" – or any other measure -- has been fiercely resisted by Germany and others as it would mean European governments incurring losses on bailout loans. But the Greek finance minister, Yannis Stournaras, confirmed that the issue of debt relief had been raised during a visit by Eurogroup president Jeroen Dijsselbloem last week.
"Our goal is to produce a primary surplus by the end of the year," he said, referring to the surplus that the government can achieve before debt repayments. "We want to do that so that we can ask for the appropriate measures to be activated by the Eurogroup to bring the debt down. [Dijsselbloem] repeated that this was something the Eurogroup would consider. He verified our plans."
Flying into Athens ahead of a review of the country's finances by auditors from the EU, ECB and IMF this week, the Dutch politician told reporters that the country's fiscal adjustment programme was on track, saying sweeping budget cuts and tax increases were finally paying off.
Stopping short of elaborating on what form debt relief would take, Dijsselbloem suggested that the Eurogroup could discuss the issue next year, provided that a primary surplus was recorded first. Loan instalments from creditors are due to end in May 2014.
"If Greece fully complies with its commitments, then we will be ready to do more to help it," he said. "We will meet sometime before the summer [of 2014] to examine what more Greece might need, always under the condition that the targets that have been set are achieved."
