Greece’s Creditors Dispute on Greek Bailout, While Germans Speak of Fresh Debt Restructuring

Posted by in Economy

Greece’s economy, debts, loans and inability to take the problems under control spark fierce discussions not only among the locals like taxpayers and tax-evaders, unionists and unemployed, employees and pensioners, representatives of political parties. Equally involved in the dispute are the country’s international and European creditors, taxpayers around Europe and economists. However Greece’s lenders seem to agree that the country has ot remain in the euro zone. But at what cost for its creditor?  

Wall Street Journals: Fight Looms on Greek Bailout

Creditors Must Negotiate Who Will Sacrifice to Save Athens From Bankruptcy, as Shortfall Worsens

A confrontation is brewing among Greece’s international creditors over who will provide the financing needed to keep the country afloat.

A report by international inspectors, due in October, will state how big the funding shortfall is in Greece’s bailout program, but European officials say the deficit is far too big for Greece to close on its own.

That means the International Monetary Fund, the European Central Bank, and euro-zone governments such as Germany will have to negotiate over which of them will make painful concessions to ease Greece’s debt-service burden. That is intended to avoid a Greek bankruptcy that could force the country out of the euro and reignite financial panic across the currency bloc.

All sides, including Athens, are determined to keep Greece in the euro, officials say—they just don’t know how yet (Full Article: WSJ)
 
At the same time, Germans have doubt on the adequacy of the current aid package to Greece. According to German daily Handelsblatt
 
“The finance industry doubts the adequacy of the current aid package for Greece and the reforms and savings required in order to bring the country back to track. Commerzbank-chief Blessing does not think so, something he made clear during a conference. He holds a renewed waiver from the side of creditors, including the government funder, for possible.
 
Daily “Financial Times Deutschland” reported that the focus of considerations for a second cut [debt restructure/”haircut”] was on the bilateral loans to Greece from the first bailout (May 2010-end 2011). A volume of 53 billion euro. the IMF was pushing for a debt restructuring of public funding. But neither the IMF nor the ECB would participate: The IMF insisted on its status as primary donor, the ECB argued that a debt remission would be direct government financing.” (Handelsblatt)
 PS If one adds the recent scenarios about a third bailout, all I can say is “Three bailouts, two debt restructurings: Still wondering why this did not happened in May 2012.”