ECONOMY

Germany to end credit guarantees for exports to Greece

The German government will stop issuing credit guarantees for exports to Greece at the end of the year because private insurers have signaled they are ready to cover the risks of non-payment themselves.

Germany began offering so-called Hermes guarantees for businesses exporting to Greece at the height of the eurozone financial crisis in April 2012, when fears of a Greek exit from the currency bloc were rife.

The guarantees offer security to exporters and banks that do business in markets where there is a risk of non-payment.

An economy ministry document seen by Reuters on Sunday showed Germany planned to end the guarantees, which under European Union rules are normally reserved for countries outside the 28-nation bloc, from Dec. 31.

In the document, Economy and Energy Minister Sigmar Gabriel said: “It is a good sign that the private insurance industry is prepared once again to cover Greek risks. Therefore it is logical and right for the German government to pull back.”

Since April 2012, Berlin has provided guarantees for roughly 560 million euros worth of short-term bills owed by Greek clients to German firms. Roughly 200 German exporters and 800 Greek firms have benefited from them over the past two-and-a-half years, according to the ministry document.

Data released last month showed Greece emerged from a crippling six-year recession in the first quarter of this year and has been growing ever since.

The Greek government wants to exit its 240 billion euro bailout from the European Union and International Monetary Fund (IMF) by the end of the year, in part to boost its popularity ahead of a presidential vote in February.

But talks with the so-called troika – the EU, IMF and European Central Bank – have been held up by a row over a budget shortfall next year.

[Reuters]