Wednesday 28 September 2016

Eurozone finance ministers discuss measures to ease Greece's debt

Published 09/05/2016 | 02:21

Protesters raise a Greek flag during an anti-austerity rally in front of the parliament in Athens (AP)
Protesters raise a Greek flag during an anti-austerity rally in front of the parliament in Athens (AP)

European finance ministers have debated measures to ease Greece's massive debt burden amid concern the International Monetary Fund might withdraw from bailout talks.

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Ministers from the 19-nation eurozone met in Brussels to discuss short, medium and long-term measures to help Greece, but are refusing to consider any reduction of the amount owed.

Greece's debt stands at about 180% of gross domestic product and the IMF believes that primary surplus targets set by its creditors to secure billions of euro in rescue loans will be too tough to respect.

Until now, eurozone countries have balked at discussing debt reduction until a long-delayed review is completed into how effective Greece has been in implementing austerity measures to secure last year's 86 billion euro (£68 billion) rescue package.

But eurogroup chairman Jeroen Dijsselbloem has conceded "it is fair to assume that there will be debt sustainability issues" for Greece in the years ahead.

He said the ministers discussed short-term steps to optimise the management of Greece's debt, medium-term measures like longer payment and grace periods once the current programme ends in 2018, and to assess additional measures in the years after 2018.

Mr Dijsselbloem said it is "too early to say" whether the measures discussed would satisfy the IMF. He said that technical level talks would flesh out the measures in coming weeks and that he hoped further progress could be made when the ministers meet again on May 24.

Greek Prime Minister Alexis Tsipras's government has to make a 2.3 billion euro debt repayment in July.

Greek finance minister Euclid Tsakalotos said: "It's a great relief that we are talking about debt and a great relief that we are talking about specifics.

"Not everything has been sorted out. But a lot of things have been sorted out and there is every expectation that the pieces of the jigsaw will be put in place by May 24."

The IMF wants the eurozone states to agree to write off some of the money Greece owes them. Many states, led by Germany, have so far rejected that, though they could look to help Greece by extending debt repayment dates and lowering interest rates further.

Finland's finance minister, Alexander Stubb, said: "Haircuts are off the table."

The eurogroup meeting comes after Greece's parliament approved a reform of the pension and tax systems. The reform, which would raise social security and pension contributions and hike taxes for many people, has run into fierce resistance from unions, which have launched repeated protests and walkouts - including a three-day general strike since Friday.

Greece's economy has been hammered by six years of budget cuts that were required by creditors to reduce the country's public debt. The country has needed bailout loans since it was locked out of international borrowing markets in 2010 amid investor worries about its public finances. About a quarter of the workforce is now unemployed.

Greek labour minister George Katrougalos has said the government would not accept "additional actions" to reduce government spending beyond what it agreed to last summer, when Athens signed up to the third bailout.

The IMF wants Greece to agree to the additional budget actions, which would be taken in case it misses its targets, but Greece and its other eurozone creditors are against that. The ministers discussed a "contingency" mechanism of additional measures that could take effect if Athens falls short.

Press Association

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