ECONOMY

ECB?s Nowotny favours giving Greece more time

European Central Bank policymaker Ewald Nowotny on Tuesday favoured giving Greece more time to repay its financial aid rather than issuing new loans.

Nowotny said a Greek debt restructuring would damage both Greece and other countries in the 17-member euro zone.

“You have to be aware that this would immediately have massive consequences for the Greek banking system and for the banking system overall,» Nowotny told Austrian radio. «That would only heighten the crisis.”

Nowotny said it was primarily up to Greece to put its financial house in order and that a restructuring must be avoided.

Asked whether Greece would get fresh loans, Nowotny said: «The first step has to be on Greece’s side. Only when we have a clear view here can we consider whether the existing programme must be rounded out, but that is something one can judge only in the weeks ahead.”

“It does not have to be fresh loans. It could also be a question of the time horizon of how long one has to repay,» Nowotny said, noting Greece next year had to repay 25 billion to 30 billion euros.

Athens denied on Tuesday that it is set to agree a new loan package with the European Union and the International Monetary Fund as early as next month after running into more fiscal difficulties.

Another ECB policymaker, Juergen Stark, said on Tuesday a debt restructuring wouldn?t solve Greece?s problems.

?Every euro member state must service its debt,? Stark said in an interview with Germany?s Bayerischer Rundfunk. ?At the end of the day, a restructuring wouldn?t be a solution to the problems that Greece needs to overcome. There are structural problems and the budget needs to be brought under control,? he said.

Stark said that Greece is ?not insolvent? and added that the current fiscal program is aimed at regaining market access for the debt-laden country.