German Finance Minister Wolfgang Schaeuble said an estimate by the International Monetary Fund that Greece will need an additional 11 billion euros to see it through to 2015 was “not completely unrealistic.”
Schaeuble provoked a storm last week when he said more explicitly than before that Greece would need a third bailout, going much further than Chancellor Angela Merkel had done. The government then sought to play down his remark.
“The estimate of 11 billion euros is not completely unrealistic. At any rate we are talking about a fraction of the amount of previous bailouts. A lot has been achieved already, but Greece is still in a crisis of adjustment,” he told the Passauer Neue Presse newspaper in an interview published in its Wednesday edition.
He ruled out the possibility of any additional debt write-down.
Opposition parties seized on Schaeuble’s comments about the need for a third bailout, saying Merkel has been hiding the risks of more aid before the September 22 election in which she is expected to win a third term.
As Europe’s largest economy, Germany has the biggest exposure to Greece and voters are reluctant to provide more aid. Pollsters say Merkel could lose votes if people think she is being less than open about the Greek risks.
Turning to interest rates, Schaeuble described himself as no fan of low rates.
“The cheap money policy by central banks all over the world is a sign of economic weakness in some countries. When the economy grows, then the central banks can raise rates again. It may be nice that Germany can borrow at extremely cheap rates because it is considered particularly trustworthy, but that is not healthy in the long run,” he said.
“When things return to normal then a safe country like Germany should also pay rates just above the rate of inflation.” [Reuters]