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Euro Finance Ministers Break Taboo And Talk About Greek Debt Restructuring

Euro Finance Ministers Break Taboo And Talk About Greek Debt Restructuring

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.”

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