The European Union needs to look for ways of reducing Greece?s debt servicing costs, Swedish Finance Minister Anders Borg said, suggesting a shift in focus as the bloc begins considering additional aid for the country.
More than a year after the EU and the International Monetary Fund extended Greece 110 billion euros in aid, they?re considering options for additional support as the country?s borrowing costs and indebtedness continue to grow.
The yield on two-year Greek notes rose to a euro-era record of more than 30 percent last week. The nation?s debt burden will rise to 158 percent of GDP this year from 143 percent in 2010, according to EU forecasts.
?If the Greeks are now delivering, and if they can stick to that plan and continue to perform in a way that is building credibility, that is shifting the balance of discussion,? Borg said yesterday in an interview in Aix-en-Provence, France.
?They are at a very, very high debt level, so if we are going to see them return to the market, we have to do something about restoring debt service,? he said, adding that reducing interest rates and debt guarantees are among options that need to be considered.
European finance ministers gather in Brussels on Monday to discuss a possible package, though an agreement probably won?t be reached before early in the European autumn, Borg said. Any effort to draw support for Greece from banks, insurers and other investors should also be judged on how it improves debt sustainability, he said.
Financial firms are discussing a proposal from French banks to roll over 70 percent of bonds maturing by mid-2014 into new 30-year Greek debt backed by AAA-rated collateral. EU leaders want creditors to voluntarily roll over about 30 billion euros of Greek bonds to support loans by the bloc and the IMF.