NEWS

US presses eurozone to ease Greek debt burden

TAGS: Finance

The US is pressing euro-area countries to agree to an overhaul of Greece’s debt to give private sector investors confidence that the nation’s borrowing burden is sustainable, a US Treasury official said on Wednesday.

Europe needs to take action to lower Greece’s overall debt levels, said the official, who asked not to be identified because discussions are in progress.

Participation by the European Bank for Reconstruction and Development would also be helpful to restore financial stability in Greece, the official said.

The EBRD, which was created to help Central and Eastern European countries after the Cold War, could lend staff and contribute technical expertise to help the Greek banking system get on a firmer footing, according to the official.

Lowering interest rates and extending maturities can ease Greece’s debt burden, and the US and International Monetary Fund have stopped short of calling for writing down the principal of the loans.

Many euro-area nations have indicated that would be a “red line,” while indicating they might agree to better servicing terms.

Greek government officials say the EBRD, which took bank stakes in Cyprus, has indicated its willingness to take part in the Greek banks’ search for fresh capital.

The EBRD is actively looking at the recapitalization plans of the Greek banks with a view to determining whether we can play a role in the process over the next few weeks, said Axel Reiserer, a spokesman for the London-based development bank.

The EBRD has recently established a presence in Greece and is now building relationships and exploring options for investments, Reiserer said.

[Bloomberg]

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