Wednesday

25th May 2016

Report: Troika considering second debt restructuring for Greece

  • (Photo: Wayne Lam (Ramius))

The troika of international lenders is considering a second debt restructuring for Greece, according to Financial Times Deutschland.

"There is such a discussion," a senior official told the paper.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The discussion reportedly revolves around writing off Greece's first bailout of €110bn dating back to 2010, when eurozone states, the European Central Bank and the International Monetary Fund cobbled together a bailout via bilateral loans.

But neither the IMF or the ECB is willing to take any losses, putting the whole burden on eurozone governments, sources told the newspaper.

The IMF always insists on getting its money back in countries they lend to around the world and the ECB considers a debt write-off as direct government funding, which is forbidden under its rules.

If agreed, the debt restructuring would be the second so-called haircut, after banks and investment funds earlier this year agreed to slash €100bn off the country's debt by agreeing to lose 70 percent of the returns on the old Greek bonds they held.

The deal was a first-ever 'private sector involvement' for a eurozone country and a precondition for a further €130bn bailout to be paid mostly by eurozone states and the ECB, with a small contribution from the IMF as well.

A second haircut is also floated as a likely scenario by the head of Commerzbank, one of Germany's biggest private lenders.

"We will eventually see another debt haircut on Greece, in which all creditors will have to participate," Martin Blessing said at a conference in Frankfurt on Thursday (20 September).

Meanwhile, in Athens, the government is struggling to implement €11.5bn worth of spending cuts which are needed for the next tranche of the bailout to be disbursed. One measure they reportedly agreed on early Friday morning is to raise the retirement age to 67 years, Reuters reported.

Experts from the troika (ECB, IMF and EU commission) are currently in Athens trying to fill the funding gap that emerged from a worse-than-expected recession and months of political quarrels, including two consecutive general elections.

A senior EU official told this paper last week that the troika will in the end "fudge" the report so that no third bailout is required.

Stakeholders' Highlights

  1. World VisionDeclares the World Humanitarian Summit a Positive Step in a Longer Journey to Ending Need
  2. EJCPresident Dr. Moshe Kantor on Brexit and the Jewish Question
  3. Swedish EnterprisesNew rules for posted workers - Better Protection or the End of Posting ?
  4. Innovators Under 35Meet MIT Technology Review's Innovators Under 35 Award Recipients from Belgium on 25 May, 6pm
  5. Open EuropeJoin the Brussels Brexit Debate on Wednesday, 25 May at 5:00 PM
  6. World VisionWhy The EU Needs to Put Children at the Centre of Emergencies - In Their Words
  7. ACCASustainability Reporting in Danger of Losing Its Momentum Says ACCA and CDSB
  8. Dialogue PlatformDiversity as Heritage of Humanity! Join the “Colors of the World“ Show at the EP
  9. Centre Maurits CoppietersNew Responses to the Basque Peace Process? MEP Juaristi on Stateless Challenges Conference
  10. European Healthy Lifestyle AllianceImproving Cardiovascular Health Begins by Closing the Gap in Sex Disparities
  11. IPHRBrussels Talks to Take Stock of Human Rights in Turkmenistan
  12. Belgrade Security ForumOpen Call for Applications! Join the Events Team at the 6th Belgrade Security Forum.