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Germany Opposes another Write-Down for Greece
Posted on: 20 Nov 2012  |   Tags: Germany Economy , Germany Relations , Greece Economy ,

Germany is standing firm in its opposition to another major write-down of Greece's debt ahead of a meeting Tuesday that aims to clear the way for the next disbursement of aid to Athens. Opulentus Germany"A haircut remains unimaginable," Finance Ministry spokeswoman Marianne Kothe said at a regular government news conference Monday, as euro-zone finance ministers work to thrash out a deal. Greece's official lenders—the European Union, the European Central Bank and the International Monetary Fund—have debated publicly how to put Greece back on track to meet the requirements of a €173 billion ($220.5 billion) aid package to 2014 and be able to shoulder its debt burden in the longer term. A final decision on disbursing some €44 billion in loans to Greece has been held up by a dispute between the IMF and European finance ministers over what needs to be done for Greece to manage its debt with its own resources by 2020. The dispute has held up completion of a report by the "troika" of experts from the IMF, the European Commission and the ECB. A euro-zone official said told Dow Jones Newswires that he expects the troika to present its report to euro zone finance ministers before Tuesday's meeting. But he added that there was little point to meeting if there is no report. "The euro group is about making a decision on Greece based on the troika report," the official said, speaking on condition of anonymity. "There has to be a recommendation of the troika for the euro group to make a decision." Even if the troika report is ready by Tuesday's meeting, German officials say finance ministers from the 17 countries that use the euro may not be able to make a decision. "It's not certain that we will reach an agreement," Deputy Finance Minister Steffen Kampeter told reporters in Berlin on Monday, adding that he did not expect Germany's parliament to be able to vote on a euro group recommendation this week. The German parliament must approve the release of a fresh batch of loans to Greece. Parliament is in session this week and next, and then goes into recess until Dec 14. Hermann Gröhe, secretary-general of German Chancellor Angela Merkel's Christian Democrats, Monday ruled out a debt write-down for Greece, saying it would send the wrong signal. Other Christian Democrats have been more outspoken. Volker Kauder, the parliamentary leader for Ms. Merkel's conservative alliance in parliament, called the suggestion that a haircut is inevitable "absurd" in an interview with the mass daily BILD-Zeitung Monday. Klaus Regling—the head of Europe's bailout fund and a strong advocate for keeping Greece in the euro zone—told the newspaper Handelsblatt Monday that a public-sector haircut on Greek debt is unlikely, saying "a public debt cut is something entirely extraordinary that can only exist in extremely exceptional situations." Last week, Jens Weidmann, president of the Deutsche Bundesbank, Germany's central bank, said Greece should be granted further debt relief only as a reward for full implementation of the economic reforms that are linked to receiving aid. The Greek bailout runs through 2014, but there is growing doubt that Greece will be able to leave the program then and return to capital markets. The German government is loath to discuss the necessity of a third bailout for Greece with a general election less than a year off, but European officials are increasingly raising the issue. Joerg Asmussen, ECB Executive Board member, said in an interview on German public television network ZDF that a third Greek bailout is inevitable. "We don't expect that the country will have access to the markets in 2015 and 2016," Mr. Asmussen told ZDF. "That means a follow-up program would be necessary." Source: http://online.wsj.com/article/SB10001424127887323353204578129092635147034.html?mod=googlenews_wsj

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