Analysis: Greece hopeful, but any debt relief likely to be symbolic

Tue Jan 14, 2014 9:55am EST
 
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By Jan Strupczewski

BRUSSELS (Reuters) - Greece expects the euro zone to provide some debt relief to Athens later this year but the impact on its vast liabilities will be little more than symbolic.

The magic bullet for Greece would be the writing-off of some portion of the 240 billion euros in loans it has received from the euro zone since 2010. But Athens is adamant it does not want that and the euro zone is not willing to provide it.

Instead, what Greek officials seek is some combination of at least three measures: a further lowering of interest rates on existing loans, an extension of the maturities and pay-back schedule, and some relief on financing EU structural funds.

"We don't want and we're not asking for a haircut," Greek Finance Minister Yannis Stournaras said last week.

"A reduction in the interest rates and a pushing back of the amortization schedule is more effective from the point of view of the financial markets."

The critical moment to start discussing what relief can be given to Athens will come in late April, when EU statistics agency Eurostat will issue its assessment of whether Greece has achieved a budget surplus before debt-servicing costs.

Athens said on Tuesday it posted a central government primary budget surplus of 700 million euros ($956 million) last year and expects a larger surplus excluding debt payments in 2014.

In November 2012, euro zone finance ministers agreed that if Greece managed to deliver a primary surplus, they would examine ways of easing the debt burden. Athens expects that to be honored.   Continued...

 
Greece's Finance Minister Yannis Stournaras looks on during a presentation by the Organisation for Economic Co-operation and Development (OECD) of a report about Greece's economy in Athens November 27, 2013. REUTERS/Yorgos Karahalis