BUSINESS

ESM chief optimistic on Greece, but advises patience

TAGS: Economy

Klaus Regling, the managing director of the European Stability Mechanism, said on Tuesday that he is confident Greece can get on the path of sustainable growth following last week’s agreement with eurozone finance ministers, but said creditors should “wait and see” before making any decisions on long-term debt relief.

Speaking on CNBC, Regling hailed last week’s Eurogroup decision to grant Greece a new tranche of bailout funding and to agree to start debt relief talks next summer as “an important step.”

He added that the disbursement of the agreed tranche of 8.5 billion euros from a total support package of 86 billion euros is expected to take place in early July. This comes as a lifeline for Greece, which faces debt repayments of around 7 billion euros later in the month.

On the issue of debt relief, Regling said that eurozone finance ministers have made it clear since the start of the current program that talks will not begin until its expiry in August 2018, on the basis of debt sustainability analyses provided by the ESM and the International Monetary Fund, which is pushing for faster relief measures.

“Right now, Greece has very little debt-servicing debt problems. There’s no debt overhang in Greece for the next five years,” he said.

“It’s good to wait a bit and see how the economy is doing,” added Regling. “There’s a lot of uncertainty and it just doesn’t make sense to decide everything now.

Online