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ESM Chief: No Greek Debt Cut

ESM Chief Klaus Regling says Greece will have to pay back its loans
ESM Chief Klaus Regling says Greece will have to pay back its loans

While Greek Prime Minister Antonis Samaras said Greece’s battered economy will begin to recover this year – and with even a possible return to the markets – the government’s hope for reducing its debt by not paying back in full the $325 billion it owes international lenders has been dashed again.
The head of the Eurozone’s bailout fund, Klaus Regling has ruled out the possibility of a restructuring of Greek debt, media outlet EU Observer reported.
Speaking to Germany’s Spiegel magazine, Regling – who heads the European Stability Mechanism (ESM), Greece’s largest creditor with 133 billion euros in 30-year loans already disbursed at an interest rate of 1.5 percent – is quoted as saying, “There will be no debt restructuring.”
“The interest on these loans was deferred for the next 10 years. All this equals a debt restructuring, from an economic point of view,” Regling is quoted as saying. German Chancellor Angela Merkel, whose country is putting up the lion’s share of the loans, and who has insisted on harsh austerity in return, also has nixed any hope of debt relief for Greece.
The Greek government said it will have a primary surplus this year, which would be a trigger to asking for debt relief but a squabble between the lenders is making that look more unlikely.
The International Monetary Fund, which, along with the European Union and European Central Bank makes up the Troika of the country’s lenders, said it won’t accept losses either but said the ECB should.
Regling said he doubts Greece’ creditors would be open to changes in Greece’s agreement, as the IMF, which is putting in 27.2 billion euros to Greece’s two bailouts – is not allowed to lower its interest rate.
“There may be some little room for maneuver in the bilateral loans from the first bailout package. But that is up to Eurozone member states to decide – they are the creditors there,” Regling said.

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