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Brussels planning to give Greece more time to repay sovereign debt
Date 18/05/2011 14:16  Author webmaster  Hits 1111  Language Global
18 MAY 2011

By Sarah Collins and Laura Noonan | Irish Independent

THE European Commission yesterday gave its strongest indication yet that it would give Greece more time to repay its debts, but insisted that reneging on any payments was out of the question.

"While debt restructuring is not on the table, a Vienna-type initiative that aims at maintaining the exposure of private investors in Greece could be pursued, as was just agreed for Portugal," economics chief Olli Rehn said after a two-day meeting of finance ministers.

Mr Rehn was referring to the January 2009 plan by the World Bank, IMF and several other international institutions asking large banks to maintain their investments in east and central European countries.

A similar condition was attached to the €78bn Portuguese bailout, which was given the official nod by EU finance ministers yesterday.

At Finland's insistence, the government in Lisbon was told to begin negotiations to "encourage private investors to maintain their overall exposures on a voluntary basis", preventing a capital flight from the country on the scale seen last year in Ireland.

"In this context, a voluntary extension of loan maturities -- the so-called reprofiling or rescheduling on a voluntary basis -- could also be examined [for Greece]," Mr Rehn added.

The EU -- and especially the ECB -- continues to maintain its stance that a restructuring or partial default by any eurozone member would spook investors and bring down neighbouring countries.

However, consensus is growing among Greece's EU partners that the €110bn in international loans promised to the country last May is not enough to relieve the government's massive debt burden -- which is set to top €345bn this year, or 153pc of the country's annual output.

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