Euro Finance Ministers Break Taboo And Talk About Greek Debt Restructuring
Senior European finance officials broke a taboo on Tuesday in acknowledging for the 1st time that Greece may well have to restructure its debts, potentially fueling Europe’s sovereign debt crisis.
Jean-Claude Juncker, chairman of the 17 country Eurogroup said there was a requirement to move towards a “soft restructuring” of Greek debt. Other finance officials offered that the term implies debtholders agreeing on a voluntary basis to accept repayment at a later date.
Juncker said Greece first had to raise 50 billion euros ($70 billion) from privatisations in order to reduce its debts, which now stands at almost 150% of GDP. “If Greece makes all these efforts, then we must see if it is possible to make a soft restructuring of Greek debt. I am strictly opposed to a major restructuring.”
The European commissioner for economic and monetary affairs, Olli Rehn agreed with Juncker’s position adding that there was a need to maintain private investor’s exposure to Greece. He said “In this context, a voluntary extension of loan maturities, a so-called re-profiling or rescheduling on a voluntary basis, could also be examined.”
Although some Greek officials were quick to agree with Junckers statement, the Greek Prime Minister George Papanderou replied that a restructuring would do more harm than good. He spoke at a conference saying “We, the Greek government, European institutions, the other Eurozone countries, all continue to believe that the costs far outweigh any potential benefits.”