ESM Regling says “We’ll see in August 2018, if Greece needs more debt relief”

Greece’s official lenders will be able to determine if Athens needs further debt relief only in the summer of next year, the head of Europe’s rescue fund (ESM) said on Thursday.

Klaus Regling said that Greece “has received more debt relief in the past few years than any other country in the world”, referring to a haircut on debt held by private investors in 2012. He also said that it has benefited greatly from improved lending terms and does not have “a debt overhang for the next few years”.

Athens has received three international bailouts since 2010 and its debt currently stands at 177 percent of economic output.

Its third bailout ends in August 2018 and the issue of debt relief is expected to come up in negotiations over its bailout exit terms in the coming months.

Asked whether Greece needs further debt restructuring and on what terms, Regling said that euro zone finance ministers took a very clear view of that last year and concluded that “at the moment there is no problem”.

“We will look at it at the end of the (bailout) program, at the end of August or just before August 2018, based on the debt sustainability analysis at the time,” Regling told Reuters.

“If there is a need to do more and if Greece continues with reforms, we, the Eurogroup, are prepared to think about that,” he said. “It will only be possible in the summer of next year.

PS “More”? More than what? The haircut of 2012 harmed Greek bond holders and resulted in more bailout funds and debt increase. Nowadays, when we speak about “debt relief” we have something like extension of repayments in mind. Comparing Apples and Oranges in the Big Fat Greek Debt-Fruit.