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Europe

Euro zone ministers divided over Greek debt crisis

Text by News Wires

Latest update : 2011-05-17

Discussions amongst euro zone finance ministers Monday focused on Greece's deepening debt crisis, with disagreements emerging over whether to change the floundering economy’s debt repayment terms.

AP - Top eurozone officials disagreed over whether to consider changing the debt repayment terms for Greek bonds, a move some experts say is inevitable and others deem too risky for Europe’s broader financial stability.

Jean-Claude Juncker, chairman of the group of 17 eurozone finance ministers, said Monday he “wouldn’t exclude” a voluntary delay to repayments on Greek government debt that would give the struggling country more time to fix its economy and regain market trust.
 
But he was immediately contradicted by France’s Finance Minister Christine Lagarde who ruled the step out, a sign that European officials are still wrestling over what to do about Greece’s debt crisis.
 
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Juncker said the group’s adamant stance against restructuring - or giving creditors less than full value of their bond holding - did not extend to what he and others have called “reprofiling,” or a voluntary offer from bondholders to accept repayment over a longer period.
 
However, he warned that Greece wasn’t ready yet to reprofile its debt, which would only come into play after Greece makes more efforts to raise money from privatization and budget cutting.
 
Juncker made his remarks as the group signed off on a 78 billion euros ($110 billion) package of rescue loans from the EU and the International Monetary Fund and wrestled with what further to do with Greece, which has received an 82 billion euros bailout but appears unable to get back on its feet financially without more help.
 
The whole topic of altering the repayment terms of Greek bonds is an explosive one, with officials from the European Central Bank warning a restructuring - making creditors take less than 100 cents on the euro - could spread the debt crisis beyond Greece.
 
Juncker said Monday that all political parties in Greece needed to endorse further austerity and reform measures as well as further privatization of national assets.

 

Date created : 2011-05-17

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