European Economic and Monetary Affairs Commissioner Olli Rehn said giving fiscal relief to Greece by cutting its debt load shouldn’t be a goal of policy makers, saying he preferred other means.
“We’ve already had two rounds of private sector involvement concerning Greece,” Rehn said at a panel discussion in Washington on Thursday. “Personally I do not see that haircuts are either something we should aim for or would be reasonable — rather, the arsenal would be related to the extension of loan maturities and a further reduction of interest rates.”
Klaus Regling, head of the European Stability Mechanism bailout fund, said past interest-rate cuts and maturity extensions are “economically like a haircut.” Investors expect Greece to get another aid program, which is “probably needed,” Regling said at the same panel.
Euro-area finance ministers said in November they would “consider further measures and assistance” for Greece to reach a debt-to-gross domestic product ratio of 124 percent in 2020 once it achieves an annual primary budget surplus. The International Monetary Fund sees the debt load peaking at 176 percent of GDP this year.