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Dijsselbloem promises Greek debt restructuring, but after 15 years

09 October 2015 / 18:10:43  GRReporter
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"Greek government debt restructuring should be accomplished by imposing a ceiling on its annual servicing costs", President of the Eurogroup Jeroen Dijsselbloem told Reuters, adding that this proposal has broad support among European partners.

Dijsselbloem stresses that the partners set the annual ceiling for debt repayment at 15% of Greek GDP. Connecting the GDP to the debt means that the annual cost of repayment of Greek debts would be less if the economy did not achieve satisfactory growth.

In all cases, however, the President of the Eurogroup seems to have rejected the probability of pre-debt restructuring, saying that the analysis of the European Stability Mechanism (ESM) does not indicate financial problems for Greece over the next 15 years. "We will see whether there will be increasing financial requirements over the next 30 years", adds Dijsselbloem. The head of the Eurogroup notes that all issues should be discussed by the euro zone members, the European Commission and the International Monetary Fund (IMF).

So far, the IMF has not yet taken any official position on the European proposal for a ceiling on the annual servicing cost of the Greek debt but according to the sources of Reuters, the IMF believes that the 15% limit may be too high for Greece, offering as an alternative a ceiling in the range of 10% of GDP.
 
Jeroen Dijsselbloem reiterates that the Europeans want the IMF to participate in the new bailout for Greece, but diplomatically has left open the possibility of it not being involved in the third memorandum with its own funds. It is noted that the IMF has made it clear that it does not intend to provide new loans, if the Greek debt restructuring is insufficient.

The Eurogroup President, in turn, said that the IMF loans are granted at a much higher rate than the European ones are and therefore they are much more expensive. "Part of this rescue programme is phasing out the IMF loans and phasing in more European loans", he reveals.

Tags: President of the EurogroupJeroen DijsselbloemGreek debt restructuring
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