ECONOMY

Austrian FinMin opposes new haircut for Greece

Finance Minister Maria Fekter opposes further marking down the value of Greek debt to help Athens get its finances in order, according to an official summary of her testimony to lawmakers released on Friday.

The eurozone is struggling to agree a formula to make Greek debt sustainable, with Germany and the International Monetary Fund at odds over the need for governments and the European Central Bank to take a «haircut» on Greek bonds they hold to make the numbers add up.

In Thursday’s testimony to parliament’s budget committee Fekter said the ECB and national governments resisted the IMF proposal «because a haircut would hit public creditors and thus taxpayers.”

“She also opposed another debt cut in Greece,» the summary said.

The budget committee passed Austria’s draft 75 billion euro 2013 spending plan on to the full lower house with minor amendments. The budget envisions a deficit of 2.3 percent of gross domestic product and state debt peaking at 75.4 percent of GDP next year.

The committee also tweaked the government’s 2013-2016 financing plan to see sharply lower debt servicing costs next year given record low interest rates, allowing more spending on support for research, young entrepreneurs and foreign aid.

On the spending side it saw additional state aid needed for nationalised banks Hypo Alpe Adria and KA Finanz as well as the planned capital increase for the European Investment Bank, according to the summary.

Austria will run bigger public deficits than hoped this year and in 2013 as the economy performs less well than expected and aid for its struggling banks eats into state finances, the finance ministry had said last month.

[Reuters]