Greece favours debt repayment extension: Deputy PM
Stretching out the repayment of Greece's outstanding debt, beyond its EU/IMF bailout loans, could help the overborrowed country emerge from its debt crisis, its deputy prime minister said on Monday.
January 18, 2011 / 09:35 IST
Stretching out the repayment of Greece's outstanding debt, beyond its EU/IMF bailout loans, could help the overborrowed country emerge from its debt crisis, its deputy prime minister said on Monday.
"I do not believe in haircuts but in extending the repayment period on debt," Deputy Prime Minister Theodore Pangalos told Skai TV's New Files show."Debt repayment extension may refer not only to the 110 billion euros (of emergency EU/IMF funding) but the entire debt," he said.Greece's fiscal derailment in 2009, when its budget deficit jumped to 15.4% of Gross Domestic Product, saw its borrowing costs rise to prohibitive levels. Effectively shut out from bond markets, the country secured 110 billion euros in bailout loans from the International Monetary Fund and its euro zone peers in May last year to avoid default.In exchange, Greece committed to slash deficits and implement economic reforms to restore its public finances.Worries over its ability to service its debt mountain after the emergency funding ends in 2013 have kept yield spreads of Greek government bonds over German bunds at near peak crisis levels.While the government has repeatedly dismissed talk of debt restructuring, such worries persist."This (extension of debt repayment) does not put in doubt paying off in its entirety what is owed," the deputy prime minister said.A growing realisation that a deal to widen the eurozone's rescue fund was not imminent caused the euro to retreat on Monday from a one-month high reached after successful debt auctions by Portugal and Spain last week.Pangalos said Germany's stance on efforts in the currency club to stem the debt crisis remained a crucial issue for Europe."The ship of the euro is surrounded by sharks who can smell blood from kilometres away. They smelled blood in poor Greece but their aim was not us but something else," Pangalos said. "We have attacks by speculators who want to weaken the value of the euro, that's the story." Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
