Greece’s repayments unsustainable with extension
(19 April 2011 – Europe) Greece has proposed that its euro-zone partners consider extending the repayment period for its €340 billion (A$464 billion) debt.
The European Commission and the European Central Bank declined to act on the request, with one official saying if the restructuring happened, it would be easier for Greece to sustain its debt.
Greece was able to secure a €110 billion bailout loan from the European Union and the International Monetary fund (IMF) to help with debt repayments this year, however, the country needs to raise about €30 billion in 2012.
The IMF has said the fund has considered extending the loan repayment schedule for Athens, a form of restructuring.
A scenario to be examined first will involve extending debt repayments by as much as 30 years, the officials said, where private bondholders could be offered new bonds in exchange for old bonds with the same coupon, but with a longer maturity. Another scenario could involve reducing Greece's coupon payments and extending maturity dates.
The European Commission, the EU's executive arm, is conducting a 'sustainability review' with the IMF and aims to complete it in late northern spring or early northern summer, EU economics commissioner Olli Rehn said last week.
This review is a normal part of the commission's quarterly economic assessments, but 'this time it is of particular importance,' Mr Rehn said.
Greece was able to secure a €110 billion bailout loan from the European Union and the International Monetary fund (IMF) to help with debt repayments this year, however, the country needs to raise about €30 billion in 2012.
The IMF has said the fund has considered extending the loan repayment schedule for Athens, a form of restructuring.
A scenario to be examined first will involve extending debt repayments by as much as 30 years, the officials said, where private bondholders could be offered new bonds in exchange for old bonds with the same coupon, but with a longer maturity. Another scenario could involve reducing Greece's coupon payments and extending maturity dates.
The European Commission, the EU's executive arm, is conducting a 'sustainability review' with the IMF and aims to complete it in late northern spring or early northern summer, EU economics commissioner Olli Rehn said last week.
This review is a normal part of the commission's quarterly economic assessments, but 'this time it is of particular importance,' Mr Rehn said.
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