Greece and its lenders appear to be edging toward a formula that would make the crisis-stricken country’s debt sustainable, with Finance Minister Yannis Stournaras suggesting on Thursday that only 10 billion euros stood in the way of a deal.
Technical experts on the Euro Working Group continued to crunch the numbers in a bid to come up with a strategy for reducing Greek debt that would be acceptable to all members of the eurozone and the International Monetary Fund. Sources said that another 8 to 10 billion euros was needed to meet the target.
The IMF has accepted that Greek debt will not meet its target of 120 percent of GDP in 2020 and is willing for this to change to 124 percent in the same year.
So far, the technical experts have found ways, including the European Central Bank giving up profits on Greek bonds and Greece embarking on a bond buyback scheme, to reduce debt to 130 percent of GDP by 2020. Greece is also set to save 40 billion euros if its euro partners agree to lower the interest rates on bilateral loans to Athens.
“In Greece, we have done our part, now it is our European partners’ and the IMF’s turn to deliver as well,” said Samaras as he headed into a meeting of EU leaders in Brussels that would focus on the 2014-20 Union budget.
However, German Finance Minister Wolfgang Schaeuble presented a new potential obstacle to an agreement on Monday when he suggested that Greece could not benefit from a haircut and continue to receive bailout loans as well.
“The moment we decide to give Greece a haircut, we cannot give any new guarantees,” he said on Thursday.
“That is logical because the budget law rightly says you can only take on guarantees if you believe that the debt will be paid back, so you can’t do both,” he added.
However, there were others in Germany who called for a compromise to be found when eurozone finance minister reconvene next week.
“Those who want to avoid a haircut of public creditors and see that as a red line must be ready to move on other issues,” Joerg Asmussen, Germany’s representative at the ECB, was quoted as saying in Passauer Neue Presse.