German newspaper Die Zeit refers to European Union sources, which estimate that the sustainability of the Greek debt requires restructuring and reduction of 40%-50% of its nominal value, while German Finance Minister Wolfgang Schäuble admitted that he expects a report about the Greek debt by June.
He said that if this report conclude that the debt sustainability is in doubt, then something must be done immediately or even Germany will face the consequences. However, he stated that up until 2013 private creditors could only be subjected to voluntary debt restructuring.
While, parties of Germany’s governing coalition suggested that a majority approval is required for Germany’s participation in the rescue fund disputing last EU summit’s decisions, political parties in Finland campaign against a Portugal bailout ahead of next Sunday’s elections.
In this context, several lawmakers of the Greek ruling party refer to the need of a debt restructuring in terms of a voluntary or not agreement with the markets, while S&P estimates that Greek bonds must bear a haircut of 50%-70%. Greek government’s spokesman replied that the government is obliged to deny any speculation regarding intentions for debt restructuring.
Debt reduction through the implementation of the Memorandum of Understanding and the extension of Greek loan repayment period don’t seem convincing at all, while the borrowing cost maintains an upward trend and the recession of Greek economy allows no optimism.
On the other hand, the problematic situation in Portugal and the internal political crisis in European parliaments decrease the possibility of a more flexible encounter of the debt crisis in Euro-zone.
In this context, the possibility of “magical” initiatives has become significantly minor, resulting in discounted voluntary or not debt adjustments in the markets.
These reactions are expected in the second quarter of 2011, when the fate of the Greek debt would be decided.
He said that if this report conclude that the debt sustainability is in doubt, then something must be done immediately or even Germany will face the consequences. However, he stated that up until 2013 private creditors could only be subjected to voluntary debt restructuring.
While, parties of Germany’s governing coalition suggested that a majority approval is required for Germany’s participation in the rescue fund disputing last EU summit’s decisions, political parties in Finland campaign against a Portugal bailout ahead of next Sunday’s elections.
In this context, several lawmakers of the Greek ruling party refer to the need of a debt restructuring in terms of a voluntary or not agreement with the markets, while S&P estimates that Greek bonds must bear a haircut of 50%-70%. Greek government’s spokesman replied that the government is obliged to deny any speculation regarding intentions for debt restructuring.
Debt reduction through the implementation of the Memorandum of Understanding and the extension of Greek loan repayment period don’t seem convincing at all, while the borrowing cost maintains an upward trend and the recession of Greek economy allows no optimism.
On the other hand, the problematic situation in Portugal and the internal political crisis in European parliaments decrease the possibility of a more flexible encounter of the debt crisis in Euro-zone.
In this context, the possibility of “magical” initiatives has become significantly minor, resulting in discounted voluntary or not debt adjustments in the markets.
These reactions are expected in the second quarter of 2011, when the fate of the Greek debt would be decided.
source: CAPITAL
