Stournaras heads to Eurogroup in search of debt relief
Finance Minister Yannis Stournaras heads to Monday’s Eurogroup with the aim of asking for further debt relief for Greece.
“In the context of presenting a new growth model for Greece in the next 10 years … I will talk of the need to look at ways of reducing debt further,» Stournaras told The Guardian newspaper.
“I will remind my colleagues of the decision that was made in November 2012 to begin such talks if Greece gets a primary surplus.”
Having achieved a primary surplus of 1.5 billion euros in 2013, Greece will demand that the Eurogroup lives up to its November 2012 commitment to examine other ways of reducing the country’s giant debt burden of roughly 175 percent of gross domestic product.
It is highly unlikely, though, that Stournaras will get an immediate answer. The matter will probably be referred to the Euro Working Group, with the technical team that advises eurozone finance ministers being asked to come up with proposals on how to reduce Greece’s debt.
“Discussions will begin but there are a number of preconditions to be met, not just the primary surplus,” a high-ranking European Union official told Kathimerini. “That is why the negotiations will take place when the next [troika] review [of the Greek adjustment program] has been completed.”
Sources have told Kathimerini that there is some reluctance within the eurozone to make any firm commitments now because of the proximity to the European Parliament elections on May 25.
The first part of the Greek proposals regarding debt relief consists of stretching the maturity of 192.8 billion euros in loans the country has received from the eurozone to 50 years. The Greek Loan Facility (GLF) loans amount to 52.9 billion euros and have an average maturity of 17 years. The 139.9 billion euros Greece has received from the European Financial Stability Facility (EFSF) have an average maturity of 30 years.
An extension could reduce Greece’s debt repayments over the next couple of decades by about 6 billion euros a year.
The second part of the proposal consists of switching to a fixed interest rate on the GLF loans. Currently, Greece is paying a rate of 0.83 percent (Euribor plus 0.50) but as the Euribor rate is expected to rise over the next few years, Athens wants to ensure lower repayments by fixing it at a low rate.
“What we need is to reduce our annual financial needs,» Stournaras told The Guardian. «We don’t want to inflict losses on our partners – we want a mutually beneficial solution.”
