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Merkel rules out sovereign default in euro zone before 2013
Date 17/05/2011 13:49  Author webmaster  Hits 1031  Language Global
17 MAY 2011

By Arthur Beesley | Irish Times

GREECE CAME under fresh pressure from its euro zone sponsors yesterday over the lack of progress in its troubled bailout, as German chancellor Angela Merkel ruled out any sovereign default in the euro zone before 2013.

A meeting of euro zone finance ministers in Brussels was overshadowed by sex attack charges in New York against IMF chief Dominique Strauss-Kahn, who had been due to attend.

Amid anxiety over the potential of the case to destabilise their efforts to contain the sovereign debt crisis, the IMF sent deputy managing director Nemat Shafik to attend the meeting in his place.

The ministers signed off on Portugal’s €78 billion bailout, the euro zone’s third after Greece and Ireland.

They also discussed the nomination of Italian Central Bank governor Mario Draghi to succeed European Central Bank president Jean-Claude Trichet. No other candidate is in the frame for the post.

Also at issue was the technical operation of the European Stability Mechanism (ESM), the permanent euro zone bailout fund due to come into force in mid-2013.

As ministers prepared to tackle the increasingly precarious financial situation in Greece, Dr Merkel made clear her resistance to any debt restructuring by the country.

Addressing students in Berlin, Dr Merkel said private sovereign creditors should not bear losses until the ESM starts its work.

“It would raise incredible doubts of our credibility if we simply were to change the rules in the middle of the first programme,” Dr Merkel said.

The chancellor’s intervention unambiguously reinforces the public stance adopted by euro group chief Jean-Claude Juncker and the European Central Bank.

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