German Chancellor Angela Merkel’s government said it is willing to consider a European Central Bank proposal for a buyback of Greek debt, as it stepped up opposition to imposing more losses on Greece’s creditors.

A restructuring of Greek sovereign debt held by its public sector partners “is out of the question” for Germany and “not in Greece’s interests,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin on Monday. At the same time, Seibert noted that Finance Minister Wolfgang Schaeuble said on Sunday that a buyback “is worth serious discussion.”

The comments suggest the German government has changed its view on debt buybacks. Schaeuble said earlier this month that he had “a number of questions for which I don’t see an answer yet” on the buyback proposal. The Frankfurter Allgemeine Zeitung reported on Oct. 13 that the government rejected the idea, citing officials it didn’t name.

Euro area finance ministers will hold a conference call on Greece on Oct. 31 after German news magazine Der Spiegel reported in this week’s edition that the so-called troika of international creditors proposes a debt restructuring for Greece that would require public-sector lenders to take heavy losses.

The troika of the European Commission, the ECB and the International Monetary Fund is compiling its report on the progress made by Prime Minister Antonis Samaras’s government in meeting internationally agreed targets that are a prerequisite for the next tranche of aid Greece needs to stay in the euro.

Schaeuble said that his government received an interim troika report last week, according to an interview with German radio Deutschlandfunk broadcast on Sunday.

After agreeing to the biggest-ever write-off on private bondholders, it would “a bit unrealistic” to impose more losses on them, he said. Members of the euro area are meanwhile restricted by law from participating in losses, therefore so- called official sector involvement “is a discussion that has little to do with the reality” of euro member states, he said.

Asked about the buyback proposal, Schaeuble said that is “something one could consider more seriously,” according to a transcript of his comments.

ECB Executive Board member Joerg Asmussen first aired the plan in an interview with German newspaper Sueddeutsche Zeitung released on Oct. 12. Greece’s efforts to reduce debt to 120 percent of its gross domestic product by 2020 may be eased if it were lent money to buy back its own bonds, which have a current market worth below their nominal value, he said.

Such a move, which he said was being considered among other instruments to help Greece, would not amount to a debt write- off, Asmussen was cited as saying. He reiterated that the ECB could not buy the debt for the Greek government.

While there is “no concrete model” as yet for a debt buyback, “fundamentally there’s a difference between deferring debt and writing it off altogether,” Finance Ministry spokeswoman Marianne Kothe said in Berlin on Monday.

Merkel, whose country is the biggest contributor to Greece’s 130 billion-euro bailout, said in August when Samaras visited Berlin that she was “deeply convinced” his government would “do what it takes to solve the problem in Greece.” She said her intention was to help Greece reach “the light at the end of the tunnel.”

Domestic pressure on Merkel’s government was ratcheted up on Monday as Germany’s biggest-selling newspaper clashed with her stance on Greece, saying that a second debt restructuring should mean the end of the road for Greece’s membership of the 17- nation euro region.

“It’s an official declaration of bankruptcy,” political columnist Jan W. Schaefer said in an op-ed in Monday’s Bild. “A country that cannot repay the debts owed to its European partners has absolutely no claim to be in the euro. If it does indeed come to a second debt cut, then Greece has to leave the euro. No-one can say we haven’t done all we could.”

[Bloomberg]