1st Dec 2021

Greece puts debt relief on the table

  • The Greek government wants its debt to be restructured (Photo: kari_1981)

Greece is trying to introduce debt relief as part of the deal it wants to reach with its creditors as bailout talks enter a critical phase.

"The main issue of the negotiations is to have a medium-term settlement of the financing gap and liquidity and to reach one single agreement," the Greek government spokesman Gavriil Sakellaridis said at a press conference on Monday.

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While the current talks are over an agreement to unblock a €7.2 billion loan which is part of the second bailout programme ending on 30 June, Athens wants its debt to the European central bank (ECB) and International monetary fund (IMF) to be restructured.

The demand was included in the Greek deal proposal sent to the EU, ECB and IMF last week.

Greece owes €24 billion to the IMF, including €1.6 billion this month, and €27 billion to the ECB, including €6 billion to be repaid in July and August, after the end of the current bailout.

In its proposal, the Greek government considered repaying the IMF in two phases, the first on 30 June and "another in accordance with a subsequence refinancing of the country's public debt".

The Greek government also considered honouring the ECB debt with money loaned by the European stability mechanism, the eurozone governments’ bailout mechanism.

“The extension of the deal alone does not meet the Greek society’s needs,” Sakellaridis said.

"We do not need a detailed agreement" on the debt "but a public commitment to address the issue," Syriza MEP Dmitris Papadimoulis told this website.

Papadimoulis referred to the Eurogroup statement of 27 November 2012 saying that "Euro area member states will consider further measures and assistance […] for achieving a further credible and sustainable reduction of Greek debt-to-GDP ratio, when Greece reaches an annual primary surplus".

Greece ran a budgetary primary surplus of 1.5% in 2015, and despite a worsened economic situation because of the current uncertainties and lack of funding, it is expected to run another surplus in 2015.

But a source in Brussels told EUobserver that the debt issue "is not on the table", while the position of the ECB is that "EU Treaties do not allow us to cancel or extend" the debt it holds.

"All this is a political issue," a source said.

"The ECB cannot tell EU countries they will have to take their losses" on money used to bailout Greece. "The issue will be resolved at a political level and endorsed by the Eurogroup".

So far, Greece's creditors have been divided on the debt issue.

The IMF believes that the Greek debt is unsustainable and would be open to restructuration talks. But this option is rejected by the ECB, supported by some Eurozone member states.

Meanwhile talks continue at different levels.

Two of Greek prime minister Alexis Tsipras' closest aides, state minister Nikos Pappas and Euclid Tsakalotos, arrived in Brussels on Monday.

In Berlin, Greek Finance minister Yanis Varoufakis visited his German counterpart Wolfgang Schaeuble.

Varoufakis said he had "a long productive conversation" with Schaeuble, adding that they "were not negotiating [but] establishing common ground."

At the G7 summit in Bavaria, German chancellor Angela Merkel warned that "there isn't much time left" to find a deal. She will meet Tsipras with France's Francois Hollande in Brussels on Wednesday, on the margins of a EU-Latin America summit.

It is unclear whether EU Commission president Jean-Claude Juncker will join them.

After Tsipras' rejection of the creditors' proposal on Friday (5 June), Juncker said on Sunday he will speak to the Greek PM when he has a Greek proposal.

"Juncker cares about some elements, like pensions and VAT on energy or medicines', a Commission official said.

"He can talk about that and he welcomes any proposal that would be acceptable".

Juncker rebukes Tsipras on parliament speech

EU commission chief Juncker Sunday displayed public impatience with Greece, accusing Tsipras of not presenting the whole truth during a parliamentary address.

Tsipras rejects creditors' offer

The Greek prime minister said the proposal presented by Greece's creditors is "a bad negotiation trick" but believes a deal is "closer than ever".

Greece seeks bailout extension

Tsirpas, Merkel, and Hollande discussed the possibility of extending the current programme and providing Greece with extra liquidity.

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