July 6, 2015 / 10:34 AM / 2 years ago

Germany says debt cuts are not Europe's favoured tool

BERLIN, July 6 (Reuters) - A German finance ministry spokesman said on Monday that a debt cut was a classical instrument of the International Monetary Fund (IMF), but Europe had opted for economic reforms as the best way to achieve debt sustainability.

“There are two possibilities. You can say there will be a debt cut. That’s one tool, it’s a classical IMF tool, so that’s nothing unusual”, Martin Jaeger said.

“However in Europe, we have agreed jointly in the past years to go a different way ... namely to implement economic reforms in order to create conditions that enable debt sustainability. This has been very successful in all countries that agreed to aid programmes, except Greece,” he added.

Europe did agree on a debt “haircut” for private investors in Greek bonds several years ago but had rejected a writedown for the public sector.

A German government spokesman added that Berlin was still convinced that the IMF should be part of any solution for Greece. (Reporting by Michael Nienaber; Editing by Noah Barkin)

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