‘Debt targets for Greece questioned’

Published on 27 September 2013 at 09:43

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The head of the European Stability Mechanism (ESM), the Eurozone’s bailout programme, has suggested Greece’s creditors do not need to write off debts because the terms of the latest round of loans offered to Athens are so favourable that they amount to a haircut for creditor countries, writes the Wall Street Journal.

ESM managing director Klaus Regling’s comments gave further support to claims that Greece will need a third bailout, adds the financial daily. It continues –

Mr Regling said the calculations—known as a debt-sustainability analysis—didn't take sufficient account of the exceptionally good terms of Greece's bailout. The euro zone's loans come at very low interest rates and, on average, won't have to be repaid for 30 years, he said. ‘When you add all of that up it's a huge grant element. And that's economically the equivalent of a haircut.’

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