Plan to extend Greek debts gathers pace

City A.M. Reporter
SUPPORT is growing in the Eurozone for the idea of giving Greece more time to pay back its EU bailout in an effort to avoid a default, although details still have to be pinned down.

Greek finance minister George Papaconstantinou said yesterday that there was no official proposal on the table, but added:

“It is clear, however, that there are thoughts on how to improve the debt sustainability of countries like Greece with a longer repayment period.”

His comments come hot on the heels of similar sentiments from German finance minister Wolfgang Schaeuble, whose country is pivotal to any solution as Europe’s strongest economy.

“Most market participants expect this problem to be tackled in a responsible way,” Schauble said when asked whether Athens would be forced to restructure its debt.

German central bank chief Axel Weber, frontrunner to be the next president of the European Central Bank, has suggested transforming international rescue loans to Greece and Ireland into 30-year loans in a bid to draw a line under the euro area’s debt crisis.

Weber floated his idea in closed-door talks with finance ministers, central bankers and private bankers at the World Economic Forum in Davos. The plan resembles the so-called Brady bonds, which rescued Latin America from bankruptcy in the 1980s.

A German source said Berlin has long been open to the idea of looking at Greece’s repayment schedule “with a view to stretching it”, but would not comment on the specifics of the plan.

The source said the negotiation involved more than just Greece and Ireland, which received bailouts last year, and would have to take into account Portugal, seen as next in the firing line.