German Chancellor Angela Merkel reiterated her rejection of bilateral deals on collateral in exchange for more aid to Greece in a newspaper interview Sunday, and also said she believes her current center-right government will be able to continue in power after elections in 2013.
Greece has moved away from a bilateral deal with Finland, under which it would have provided collateral in exchange for fresh aid, Merkel told German newspaper Bild am Sonntag.
“The creditworthiness of the country would suffer further” if some aid is collateralized and other aid isn’t, Merkel is cited as saying by the paper.
The chancellor also said common euro-zone bonds are the wrong measure to overcome the current debt crisis, the paper reports.
“Euro bonds would facilitate making even more debt,” Merkel is quoted as saying, adding that the pressure deriving from higher interest payments is needed so that heavily indebted countries stick to their austerity pledges.
Merkel added that she is confident she will convince lawmakers from her Christian Democratic party and from her junior coalition partner, the Free Democrats, to approve changes to the euro zone’s rescue fund, the paper says.
European leaders recently agreed to let the European Financial Stability Facility buy sovereign bonds in the secondary market and boost its effective lending capacity to EUR440 billion.
The German parliament plans to vote on those changes by late September, but several coalition lawmakers have said they will reject them.
Merkel also said in the interview that she believes the current coalition of Christian Democrats and Free Democrats will continue to govern after new elections are held in 2013. The coalition currently trails the opposition Social Democrats and Greens by a wide margin in opinion polls.
(source: Dow Jones)
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