The Financial Times Deutschland is reporting that Greece’s troika creditors – the IMF, the ECB, and the EU – are discussing a new debt relief program for Greece, which is quickly running out of money to service its existing debts.The plan would include a haircut on Greek sovereign bonds bought as part of the crisis measures by the troika in 2010.
However, the ECB and the IMF would NOT participate in a debt restructuring, instead putting all of the burden on the euro area nations that contribute to the EU’s bailout funds.
The ECB’s non-involvement is a big deal because one of the key cornerstones of its new bond-buying plan is to assure holders of euro area government debt that it will NOT subordinate private investors in the event of future writedowns on sovereign bonds.
More from FT Deutschland, via Google Translate:
The troika has the Greek austerity proposals have not accepted any. But even if the austerity package totaling 11.7 billion euros for 2012 and 2013 should finally be decided remains a financial gap.
If the euro-zone countries and the IMF would fill that gap on larger loans, the total debt would rise in 2020 and can no longer fall to around 120 per cent. This is the pain threshold for the IMF. The IMF urges been on a debt restructuring of public funding, which is now so over two-thirds of the total debt of around 330 billion euros.
Neither the IMF nor the ECB would participate but even in such a haircut. The IMF insists on its status as a privileged creditor and has in its history back almost always get his money. The ECB argued internally that debt relief is direct government funding. The ECB’s 2010 Greek bonds purchased on the market in early 2012 had been excluded by the then average debt for the private sector. Therefore, the thinking now concentrate on the support of the euro countries.
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