EUROPE is preparing a Greek debt restructuring plan that it hopes will allow Athens to claw its way out of a deep depression.
Klaus Regling, German head of the eurozone’s bailout fund, the European Stability Mechanism, said the options for easing Greece’s debt burden include extending loan maturities, suspending interest rate payments and transferring central bank profits back to Athens. However, he ruled out any writedown of Greece’s debt, a key commitment for Europe’s paymaster, Berlin.
Regling warned that a Greek exit from the euro was still a possibility if Athens did not fulfil the terms of its third bailout agreement.
Last week, Alexis Tsipras, who resigned as prime minister but hopes to return to power after an election on September 20, said he would favour longer repayment periods and lower interest rates to manage Greece’s €320bn (£232bn) debt.
Christine Lagarde, managing director of the International Monetary Fund, echoed Regling’s views last week and said a form of debt restructuring rather than debt forgiveness should allow Greece to handle its “unviable” debt situation.
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The IMF has yet to confirm it will take part in Greece’s €86bn third bailout.