Ministers discuss loans, restructuring, not euro exit

Finance Ministers from several eurozone countries, including Greece, did meet in Luxembourg on Friday but to discuss the possible restructuring of Athens?s debt or further financial assistance for the Greek government rather than a potential exit from the euro.

A report by Germany?s Spiegel Online on Friday afternoon had suggested that the meeting, which was initially denied by several sources including the European Commission, was being held so finance ministers could debate Greece?s suggestion that it might quit the euro.

The report led to the euro dropping by more than 1% against the dollar but its content was vehemently denied by the Greek Finance Ministry, which later issued a statement confirming that Finance Minister Giorgos Papaconstantinou did take part in talks with other EU counterparts.

?It is clear that during this meeting it was never discussed or posed as an issue whether Greece would remain in the eurozone,? the ministry said.

It added that the Greek government was committed to meeting the fiscal targets it has been set as part if its loan agreement with the EU and the International Monetary Fund. However, it appears that the options Greece faces in terms of restructuring were discussed.

There is increasing speculation that despite having the terms of its 110-billion-euro bailout improved earlier this year, Greece will have restructure its debt by next year even though the EU has ruled out such a move by any eurozone members before 2013, when the European Stability Mechanism will be in place.

It is thought that the option of Greece receiving further loans from the EU and the IMF from next year was also discussed in Luxembourg.

The cost of insurance against Greece defaulting hit a record high after reports that it may exit the euro. Greece’s Credit Default Swaps costs rose 0.73 of a percentage point, costing $1.37m a year for five years to insure $10m of debt.

The Luxembourg talks were also attended by European Central Bank President Jean-Claude Trichet, Olli Rehn, the European commissioner for economic and monetary affairs and Luxembourg Prime Minister Jean-Claude Juncker, head of the group of euro-area finance ministers.

Also at the talks were ministers from Germany, France, Italy, Spain the Netherlands and Finland, according to reports.

Juncker said there was a broad discussion of Greece and other international economic issues.

?We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way – it is an avenue we would never take,? Juncker told reporters.

?We don’t want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets.

?We think that Greece does need a further adjustment program,? Juncker said. ?This has to be discussed in detail.?

Juncker said eurozone finance ministers would meet on May 16 to discuss Greece?s situation in more detail.

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