Germany rules out further Greek debt write-off | Business| Economy and finance news from a German perspective | DW | 29.10.2012
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Germany rules out further Greek debt write-off

Berlin has ruled out allowing public creditors to write off Greek debt as a way of helping the country overcome its financial woes. However, Germany’s finance minister said he is open to other ways of helping Athens.

Wolfgang Schäuble told the public radio station Deutschlandfunk on Sunday that a new so-called debt "haircut" was completely out of the question.

"That is a discussion which has little to do with the reality in the member states of the eurozone," the German finance minister said in response to a question about a report published in the weekly magazine Spiegel.

Schäuble did, however, raise the possibility of a debt buyback program, which would allow Greece to get loans to pay off creditors.

The newsmagazine reported that, though regulations prevent the European Central Bank from writing off any of the Greek debt that it holds, the institution is prepared to forgo any profits made on those bonds.

Spiegel reported that the "troika" of the European Union, ECB and the International Monetary Fund, which have examined Greece's progress towards implementing austerity measures in keeping with its international bailouts, was considering recommending the idea. This, however, has not been confirmed.

"We don't have a written report," Schäuble's spokesperson told the DPA news agency on Sunday.

As part of the second bailout, private investors agreed to write off more than 50 percent of the face value of their bad Greek holdings, a deal that reduced Athens' debt by about 100 billion euros ($129.5 billion). However, eurozone governments have until now rejected the idea of a public sector debt write-off.

Greece is said to need the next 31.5-billion-euro tranche of the bailout by the middle of next month if it is to avoid slipping into insolvency. Spiegel reported that the troika would issue a verdict on Greece's austerity efforts by November 12 at the latest. Eurozone finance ministers are expected to decide whether or not to release the funds, based on the troika's findings.

The Greek government is to present its 2013 budget, which contains the bulk of the latest austerity measures, to parliament on Wednesday.

pfd/mkg (AP, dpa)