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Greece Needs to Repay its Debt; Restructuring Talks Possible

benoit-coeureThe new Greek government which will be formed within the next few days will have to respect its commitments and repay the debt that is owed to Eurozone taxpayers. However, Benoît Coeuré, ECB official noted on Monday, that a possible debt maturity extension may be possible.
On Sunday, January 25, Greek voters elected the radical left party SYRIZA as the country’s new administration. The party’s leader Alexis Tsipras, has promised to rid the country of austerity measures, while one of his main positions is the debt haircut.
“Mr. Tsipras must pay, those are the rules of the game, there is no room for unilateral behavior in Europe, that doesn’t rule out a rescheduling of the debt,” Coeuré said in an interview with French radio station Europe1. “If he doesn’t pay, it’s a default and it’s a violation of the European rules.”
The European Union’s institutions are eager to talk and cooperate with Greece, he added.
Meanwhile, Tsipras is aiming to replace another 40 billion bailout program with budget cuts and tax increases. However, since the bailout money has come from Eurozone taxpayers, the ultimate decision regarding a debt rescheduling will have to come from the finance ministers of each country in the Eurozone.
Greece owes around €40 billion to France and €60 billion to Germany, Coeuré said. “The debt is owed to taxpayers, not speculators or financial markets, canceling that debt would be a €40 billion gift to Greece,” he said.

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