The head of the ESM excludes the write-off of debt of Greece

The head of the ESM excludes the write-off of debt of Greece

If you increase the period of small payments on the debt, we can attract investors not only in financial sector but also in the real economy, said the head of the European stability mechanism Klaus regling.

ATHENS, 13 Dec. Gennady Melnik. The head of the European stability mechanism, Klaus Regling stated that there will be a nominal write-off of Greek public debt, but will improve its terms — extended payment terms and reduced interest rates.

In an interview with the newspaper “Vima” Regling also said that, in his opinion, the IMF will participate in the program of lending to Greece, despite the objections of Prime Minister Alexis Tsipras. “The agreement of heads of state and government in July (on the third aid programme) and the decision of the Eurogroup in August clearly indicate that the IMF will participate in the program,” said Regling.

Thus, in his opinion, the contribution of the IMF in lending to the Greek economy is small. Regling also said that estimates of the ESM and the IMF regarding the sustainability and viability of the debt of Greece are the same. “In Europe, the ESM can lend more than the IMF, and on the best terms — the terms large and very small interest rates. This means that the debt can be sustainable regardless of its size. Almost annual payments on the debt less than the proposed terms. We also know that the actual annual payments on Greek debt in the next eight years are very low. Then they will rise, as will end the grace period,” — said Regling.

“Nominal write-off will not, and the Greek government, it seems, understood it,” — said the head of the ESM. “If we increase the period, already a very small payment, then we will attract investors not only in financial sector but also in the real economy, where the prospects for long-term,” said Regling.

To the question about the ability of Greece to access the international financial markets in mid-2016, promises Tsipras, Regling said that may be a partial refinancing on the markets at the end of 2016, however, incomplete access to markets.

On the question of the possibility of a Greek exit from the Eurozone — Grexit — Regling said that monetary Union was formed in such a way that does not provide for the exit of any country and there are no conditions. “Greece has agreed to undertake some necessary reforms that partners have provided necessary lending, and the country could return to stable economic situation. However, in the final analysis, such a possibility always exists, if not respected the obligations of membership of a monetary Union”, — said the head of the ESM.

In accordance with the third Memorandum on the assistance programme the ESM has joined the international creditors of Greece, through this mechanism will generate a significant portion of the loans.

According to the Ministry of Finance of Greece, at the end of September the debt amounted to 314,552 billion euros. The end of the year he will be 316,503 billion euros, or 180,2% of GDP. In the third programme of assistance to Greece with 86 billion euros, part of the funds will go to pay off debt.