There will be Greek debt relief in 2018 but they will use another name for it, top German economist and chairman of the German Institute for Economic Research (DIW), Marcel Fratzscher said in an interview to jungundnaiv.de, a German website that approaches political and economic issues in a relaxed, alternative tone.
The leading German economist admitted that under the fiscal adaptation programs imposed to Greece “conditions have often been imposed that have greatly affected people. At this point, errors have been made “. However, he pointed out “on the other hand, many good things were done” especially in the form of lenders’ pressure to improve the problematic tax collection mechanisms.
Fratzscher said that “it was absolutely right” that the loans were granted under the condition of reforms “on the grounds that the economy would recover and people would find work again.”
He stressed that in 2010 it was clear that Greece was unable to repay its loans.
“German and French banks have, by far, granted the largest loans.” But the fear, following the collapse of Lehmann Brothers in the United States, that it could cause a “systemic crisis in Europe” has led to the decision to grant loans to Greece “in order to be able to return them to these banks. In the very end, this was a huge mistake. Banks, especially French and German, but all others too, would have had to pay, after all,” the DIW chairman said.
“More than half of the loans channeled from Europe to Greece, they returned to banks abroad, not Greece. That is, we as taxpayers have put the money back in the pockets of our own banks. That simply can not happen. “
“Greece has implemented many good reforms,” he said.
Marcel Fratzscher is convinced that there will be a relief of the Greek debt in 2018. “There will be a debt cut this year, however another name will be used,” he said because of the promise of the German government and ex finance minister wolfgang Schaeuble that there would be no debt haircut.
They will give it the beautiful name of “restructuring”, eventually reducing the interest rates or extending the repayment time. In fact it is exactly the same as a haircut, more or less, but it has a different name “.
He pointed out “it is quite clear. You can insist that you do not provide Greece with a debt haircut, but you will not get anything back. It is better to offer a small debt relief now to re-emerge (Greece), so that the economy can grow again so that they can serve the rest of their debt. “
Making a brief assessment of the past eight years, Marcel Fratzscher told jungundnaiv.de “Greece has implemented many good reforms. Not all of them, but many positive ones.”
PS I propose we call it “hair-styling”