Germany says Greece may have to restructure debt

14th April 2011, Comments 0 comments

Germany conceded Thursday that Greece may have to restructure its debt but said such measures, if taken before 2013, would have to be voluntary on the part of its creditors.

Finance Minister Wolfgang Schaeuble told the daily Die Welt that if the International Monetary Fund, the European Central Bank and the European Commission determined in a report in June that Greece was unable to cope with its massive debt, "further steps" would have to be taken.

The ECB and the European Commission have until now ruled out any restructuring of Greece's public debt, which has exploded to around 340 billion euros ($492 billion).

But when asked about how Greece could get out from under its massive debt, Schaeuble said the next months could be decisive.

"In June a progress report is due. I expect a detailed analysis of Greece's debt sustainability which will be carried out in consultation with the Commission and the ECB," he said.

"If this report should conclude that there is doubt about the debt sustainability, something would have to be done. Further measures would have to be taken."

Schaeuble said private creditors from 2013 would have to expect to take some losses when new rules go into effect covering debt relief for troubled eurozone countries.

"Until then, any restructuring could only happen on a voluntary basis."

The issue re-emerged last week after German news weekly Der Spiegel reported that eurozone finance ministers discussed restructuring Greece's debt in a telephone conference call on April 2 with EU Finance Commissioner Olli Rehn and ECB chief Jean-Claude Trichet.

The report said a number of ministers expressed doubts that Greece could meet a planned start-of-2012 date for a return to commercial money markets.

Like Portugal this month and Ireland in December, Greece was forced to turn to its EU partners for emergency loans after the cost of borrowing on bond markets rose to prohibitive levels.

The first eurozone state to need a bailout last May, Greece agreed a 110-billion-euro programme with the EU and the IMF after it emerged that Athens' reporting of its deficit and debt levels to Brussels masked huge holes in its finances.

© 2011 AFP

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