BERLIN: Eurozone finance ministers are considering a possible “haircut” for Greece in 2015, a German newspaper reported yesterday, in a bid to reduce the debt mountain of the recession-wracked country.
Other eurozone countries and institutions like the European Central Bank could be ready to discuss writing down a part of their Greek debt holdings to put Greece’s debt on a more sustainable footing, said the Welt am Sonntag.
The issue was discussed at a secret meeting of ministers and officials in Paris on Monday, said the paper, without citing sources. Such a haircut might be used as an added incentive for Greece to carry out the reforms required in its second aid package, which runs out in 2014, according to the Welt am Sonntag.
Germany has been firmly opposed to taking a loss on its holdings of Greek debt, unwilling to ask German taxpayers to foot the bill for keeping Athens in the eurozone.
The ECB has also ruled out such a move, saying it is tantamount to financing Greece directly, strictly forbidden by its founding treaties. But the Spiegel newsweekly reported that the ECB, as well as the International Monetary Fund, now considered a haircut unavoidable.
By writing off half of their Greek debt holdings, eurozone governments and institutions could drive down Greece’s debt to 70 percent of output in 2020, compared to 144 percent, wrote Spiegel.
AFP
