Merkel rules out Greek haircut, open to debt relief

GMT 19:16 2015 Sunday ,19 July

Arab Today, arab today Merkel rules out Greek haircut, open to debt relief

German Chancellor Angela Merkel
Berlin - AFP

German Chancellor Angela Merkel on Sunday again ruled out forgiving some of Greece's crippling debt but said Berlin was open to a flexible repayment plan.

Merkel told public broadcaster ARD that "there can't be a classic haircut -- forgiving 30 or 40 percent of debt -- in a monetary union".

But she noted that Greece had received other forms of debt relief in recent years including a "voluntary writedown for private creditors, extended maturities and lower interest rates".

"We can discuss possibilities along those lines again," she said.

Merkel said that such steps could only be agreed when initial terms of a new 86-billion-euro ($93-billion) bailout package are hammered out.

The IMF, one of Greece's creditors alongside the EU and the European Central Bank, caused a stir this month with a bombshell report criticising the latest bailout deal and warning that lenders would have to go "far beyond" existing estimates for debt relief.

And on Thursday ECB chief Mario Draghi added his voice to calls for debt relief for Greece -- whose debts amount to 180 percent of economic output -- saying the main question at this stage was what form this relief should take.

Merkel handily won a German parliamentary vote Friday to begin negotiations on a new bailout package.

But a rising number of deputies from her conservative camp have rebelled in successive votes on Greece and Merkel's hardline finance minister, Wolfgang Schaeuble, has suggested it might be better for Greece to take a five-year "time-out" from the euro.

Schaeuble said in an interview Saturday that he was prepared to resign rather than go against his convictions in the upcoming negotiations with Greece.

Asked about the comments, Merkel said she and Schaeuble would continue to be Germany's negotiators in the talks.

"And I can only say that no one has come to me and asked to be relieved of his duties," she said.

Merkel said any talk of a possible "Grexit" -- Greece exiting the eurozone -- was now off the table.

"What counts is what was agreed at the talks" during an emergency eurozone summit last weekend in Brussels where leaders agreed to negotiate another Greece bailout.

"Now we've said everything that's to be said about that and are looking to the future."

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