Germany's Schaeuble rules out cutting Greece's debt

The International Monetary Fund this week released a report saying Greece would not grow as fast as hoped and would be unable to repay its "highly unsustainable" debts in future.

Germany's Schaeuble rules out cutting Greece's debt

World Bulletin / News Desk

German Finance Minister Wolfgang Schaeuble has reaffirmed his staunch opposition to slashing Greece's debt as the IMF has urged, while Greece is hoping for a breakthrough in negotiations next week.

"We can't agree a debt reduction for Greece, it's ruled out by the (European Union's) Treaty of Lisbon," Schaeuble told ARD public television on Wednesday evening.

"For that, Greece would have to leave the monetary union," the conservative politician said.

In Brussels Thursday Greece's deputy minister of European affairs, Georges Katrougalos, said he was hopeful of reaching an agreement with eurozone partners next week.

"No one has any kind of interest in prolonging negotiations," he told journalists. 

"Nobody has any interest in again putting Greece in the midst of the problems of Europe," he said, apparently alluding to elections looming in several countries, including euro majors France and Germany.

The meeting next week on ending the impasse is expected to include Greek Finance Minister Euclid Tsakalotos, EU Economic Affairs Commissioner Pierre Moscovici, Eurogroup head Jeroen Dijsselbloem and European Central Bank (ECB) board member Benoit Coeure, a source close to the matter said.

Greece has gone through years of gruelling austerity measures since the 2008 financial crisis as it struggles with debt levels of 160 percent of GDP.

The eurozone wants Greece to deliver a 3.5 percent budget surplus before debt repayments, while the IMF believes it can manage around 1.5 percent.

The situation will become "explosive" in the long run if not addressed, the Washington-based institution warned.

 'Schaeuble not only voice' 

 But Germany's finance chief maintains said that any reduction in Greece's debt would be a breach of eurozone rules that "no member country in the monetary union can be responsible for the debts of another."

While reducing the the value of Greece's debt -- a so-called haircut -- is one option of providing debt relief, its creditors could also lower interest rates and extend the repayment period.

"The pressure on Greece to make reforms and become competitive has to be maintained," Schaeuble went on. "Otherwise they won't be able to remain in the single currency."

In reaction, Katrougalos said "Schaeuble was from the beginning for a much smaller eurozone.... This idea of an elite eurozone does not have the support of anybody else in Europe now."

He added that "even within Germany Schaeuble is not the only voice that matters." 

But without debt relief the IMF may withhold further financing for Greece -- putting an 86-billion-euro ($92.4 billion) bailout programme agreed in 2015 in doubt.

German leaders have promised voters not to offer Greece any more financial aid without the IMF -- with its reputation for competence in getting stricken countries back on their feet -- being on board.

Meanwhile, the EU's European Stability Mechanism rescue fund, which oversees the eurozone's loans to Greece, said it saw "no reason" to be "alarmist" about Greek debt.

The IMF is not taking into account the significance of the eurozone's pledge to help Greece, and that "solidarity with Greece will continue," the fund's managing director, Klaus Regling, said in an opinion piece in the Financial Times on Thursday.


Güncelleme Tarihi: 10 Şubat 2017, 09:56