In an interview in To Vima’s Sunday edition, Clemens Fuest (adviser to Germany’s finance minister Wolfgang Schaeuble), who is also an academic, said the Greek debt haircut should be higher than the agreed 50 percent to help Greece repay its debt.
“This (50 percent) rate was accompanied by the idea it would be associated with a long-term economic consolidation programme, which would reduce the accumulated debt to 120 percent of the annual gross domestic product in 2020,” he said. “But such a reduction is not enough. We had already (a debt of) 120 percent at the beginning of the crisis. So the reduction must be higher than 50 percent.”
Greece wants investors to voluntarily sign up to the PSI to avoid triggering a credit default for the country but Fuest said this was putting the deal at risk and that the swap should be compulsive.
“To my view, Greece has already defaulted,” he said. “I believe that the best thing would be if one honestly says that the Greek government cannot repay its debt. In such a way, a better settlement could be achieved”.
But Fuest warned that the PSI by itself could not help Greece unless it reformed its economy and did not rule out the nation quitting the euro, saying: “I only hope this won’t happen”.
Echoing Fuest’s remarks, Deutsche Bank Chief Economist Thomas Mayer told another Greek newspaper that Greece should put its finances in order to stay in the euro zone.
“Even after the (debt) restructuring, the prospects for the Greek debt remain a big challenge,” Mayer told Real News. “It is clear that only a comprehensive programme of economic reforms can save Greece from exiting the euro.”
(source: Reuters)
See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!
