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EU Commission would like Greek debt deal by year-end
October 4, 2016 / 4:31 PM / a year ago

EU Commission would like Greek debt deal by year-end

STRASBOURG, France, Oct 4 (Reuters) - The European Commission would like euro zone governments to reach a deal on the details of debt relief for Greece by the end of the year to boost its economic growth, European Commissioner for Economic and Financial Affairs Pierre Moscovici said.

Speaking in the European Parliament in Strasbourg during a debate on Greece, Moscovici said however, such a deal required an effort from all sides, including the government in Athens, which has to push on with agreed reforms.

“By the end of the year I would like to see, to strike an agreement on debt,” Moscovici told parliamentarians.

“That is indeed legitimate and has been long awaited, that requires an effort to be made on all sides, creditors, all partners in the Eurogroup and also the Greek authorities when it comes to implementing the reform programme,” he said.

Following a restructuring of privately-held Greek bonds in 2012, euro zone governments are now, through their bailout fund, the main owners of Greek debt. The Commission itself does not hold any Greek bonds.

In May, euro zone governments offered Greece debt relief in 2018, but left key details to be decided later in an attempt to bridge Germany’s view that no immediate action was needed and the International Monetary Fund’s call for decisions now.

The year-end deadline for agreeing on the details of debt relief is seen as ambitious by euro zone officials because such details have to be based on a debt sustainability analysis and one will only be made after Greece passes a review of its reform progress.

This review has been dragging on for months, although senior euro zone officials expect that reforms needed to complete it are likely to be legislated by Greece this week, in time for euro zone ministers to approve them when they meet on Oct 10.

An even bigger hurdle is that the biggest euro zone economy Germany wants the IMF to join the latest, third bailout programme for Greece, for credibility reasons.

But the Washington-based lender of last resort says it can only do so if a debt analysis shows Greek debt is sustainable, and it can only show that if Athens gets debt relief now.

Berlin is loath to the idea of debt relief before German federal elections in autumn 2017 because after six years of a debt crisis and three bailouts offered to Athens, public opinion in Germany, the biggest contributor to the bailouts, is against more leniency to Greece.

Euro zone officials said that in a pessimistic scenario, no details of Greek debt relief would be agreed until after the German elections.

Others say a deal could be reached if the Greek debt crisis flares up again after the Greek government runs out of money to service its obligations in April 2017. (Reporting By Jan Strupczewski; Editing by Alexandra Hudson)

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